Exhibit 10.7
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MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
among
AMERICAN HOME MORTGAGE CORP.,
as Seller,
AMERICAN HOME MORTGAGE SERVICING, INC.,
as Servicer,
THE ENTITIES PARTIES HERETO AS CONDUIT PURCHASERS,
THE ENTITIES PARTIES HERETO AS COMMITTED PURCHASERS,
THE ENTITIES PARTIES HERETO AS FUNDING AGENTS,
and
SOCIETE GENERALE,
as Administrative Agent for the Purchasers
Dated as of October 16, 2006
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions..............................................2
SECTION 1.02. Other Definitional Provisions...........................27
ARTICLE II
THE MORTGAGE LOAN PURCHASE FACILITY
SECTION 2.01. Procedures for Purchases of Mortgage Loans..............28
SECTION 2.02. Title to Mortgage Loans; Intent of Parties..............29
SECTION 2.03. Takeout Commitments.....................................31
SECTION 2.04. Sales of Mortgage Loans to Approved Takeout
Investors...............................................31
SECTION 2.05. Payment of Takeout Deficiency Fee.......................33
SECTION 2.06. Reductions and Increases to the Maximum
Purchase Limit..........................................34
SECTION 2.07. Sharing Payments........................................36
SECTION 2.08. Extension of Term.......................................36
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.01. Conditions Precedent to the Obligations
of the Purchasers.......................................37
SECTION 3.02. Conditions Precedent to Purchases.......................38
ARTICLE IV
ADMINISTRATION AND SERVICING OF LOANS
SECTION 4.01. Acceptance of Appointment; Duties of Servicer...........40
SECTION 4.02. Replacement of Servicer.................................41
SECTION 4.03. Indemnification by Servicer.............................44
ARTICLE V
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 5.01. Rights of the Purchasers................................44
SECTION 5.02. Establishment of Collection Account.....................44
SECTION 5.03. Allocations and Distributions on Settlement Dates.......45
ARTICLE VI
REPRESENTATIONS AND WARRANTIES; COVENANTS
SECTION 6.01. Representations of the Seller and the Servicer..........49
SECTION 6.02. Additional Representations of the Seller................52
SECTION 6.03. Additional Representations and Warranties
of the Servicer.........................................54
SECTION 6.04. Survival of Representations.............................55
SECTION 6.05. Covenants...............................................55
SECTION 6.06. Negative Covenants......................................61
ARTICLE VII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 7.01. Indemnities.............................................63
SECTION 7.02. Indemnity for Taxes, Reserves and Expenses..............64
SECTION 7.03. Taxes...................................................66
SECTION 7.04. Other Costs, Expenses and Related Matters...............67
ARTICLE VIII
TERMINATION EVENTS
SECTION 8.01. Termination Events......................................67
SECTION 8.02. Waiver of Past Defaults.................................72
ARTICLE IX
THE ADMINISTRATIVE AGENT; FUNDING AGENTS
SECTION 9.01. Authorization and Action of Administrative Agent........72
SECTION 9.02. Administrative Agent's Reliance, Etc....................73
SECTION 9.03. Credit Decision.........................................73
SECTION 9.04. Indemnification of the Administrative Agent.............74
SECTION 9.05. Successor Administrative Agent..........................74
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SECTION 9.06. Payments by the Administrative Agent....................75
SECTION 9.07. Authorization and Action of Funding Agent...............75
SECTION 9.08. Funding Agent's Reliance, Etc...........................76
SECTION 9.09. Credit Decision.........................................77
SECTION 9.10. Indemnification of the Funding Agent....................77
SECTION 9.11. Successor Funding Agent.................................77
SECTION 9.12. Payments by a Funding Agent.............................78
ARTICLE X
ASSIGNMENTS AND PARTICIPATIONS
SECTION 10.01. Assignments; Additional Purchaser Groups...............78
SECTION 10.02. Participations.........................................81
SECTION 10.03. Replacement of a Purchaser Group.......................81
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Agreement; Survival.....................82
SECTION 11.02. Protection of Right, Title and Interest
to Purchased Assets....................................82
SECTION 11.03. Waivers; Cumulative Remedies; Amendments...............83
SECTION 11.04. Governing Law; Submission to Jurisdiction;
Integration............................................83
SECTION 11.05. Counterparts...........................................84
SECTION 11.06. Headings...............................................84
SECTION 11.07. Notices................................................84
SECTION 11.08. Successors and Assigns.................................85
SECTION 11.09. Severability of Provisions.............................85
SECTION 11.10. Further Assurances.....................................85
SECTION 11.11. Confidentiality........................................86
SECTION 11.12. Setoff.................................................87
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SECTION 11.13. Merger and Integration..................................2
SECTION 11.14. Certificates and Opinions of Counsel....................2
SECTION 11.15. Non-Petition Covenant...................................2
SECTION 11.16. Limited Recourse........................................2
EXHIBITS
Exhibit A -- Form of Assignment and Assumption Agreement
Exhibit B -- Form of Joinder Agreement
Exhibit C -- Form of Daily Report
Exhibit D -- Form of Initial Purchase Date Notice
Exhibit E -- Form of Monthly Statement
Exhibit F -- Form of Trade Assignment
Exhibit G -- Form of Purchase Date Notice
Exhibit H -- Form of Maximum Purchase Limit Increase Notice
Exhibit I-1 -- Form of Seller Compliance Certificate
Exhibit I-2 -- Form of Servicer Compliance Certificate
Exhibit I-3 -- Form of AHMIC Compliance Certificate
SCHEDULES
Schedule A -- Purchaser Groups
Schedule B -- Notice Addresses
Schedule C -- Approved Takeout Investors
Schedule D -- Litigation
Schedule E -- Delegated Servicing Duties
Schedule F -- Trade Names
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MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
THIS MORTGAGE LOAN PURCHASE AND SALE AGREEMENT, entered into and
dated as of October 16, 2006 (as hereinafter amended, restated, supplemented or
otherwise modified from time to time, the "Agreement"), is by and among:
AMERICAN HOME MORTGAGE CORP. ("AHM"), a New York corporation, as
the Seller;
AMERICAN HOME MORTGAGE SERVICING, INC. ("AHMS"), a Maryland
corporation, as the Servicer;
▇▇▇▇▇▇ CAPITAL LLC, a Delaware limited liability company
("▇▇▇▇▇▇"), and each other entity from time to time party hereto as conduit
purchasers, each as a Conduit Purchaser;
▇▇▇▇▇▇ and each other entity from time to time party hereto as
committed purchasers, each, individually, as a Committed Purchaser;
SOCIETE GENERALE, a banking corporation organized under the laws
of France, acting through its New York Branch ("SG"), and each other entity
party hereto from time to time as funding agents, each as a Funding Agent; and
SG, as Administrative Agent.
PRELIMINARY STATEMENTS
WHEREAS, the Seller desires to sell to the Purchasers Mortgage
Loans;
WHEREAS, subject to the terms and conditions contained herein,
the Administrative Agent, on behalf of the Purchasers, will purchase such
Mortgage Loans;
WHEREAS, the Seller will cause the Mortgage Loans purchased by
the Administrative Agent, on behalf of the Purchasers, to be sold to one or more
Approved Takeout Investors; and
WHEREAS, AHMS has agreed to act as the initial Servicer
hereunder.
NOW THEREFORE, in consideration of the premises, the mutual
covenants and agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each party agrees as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Agreement, terms
defined in the foregoing paragraphs shall have their defined meanings when used
herein, and the following terms shall have the following meanings:
"Accepted Servicing Standards" shall mean the same manner in
which the Servicer services and administers similar mortgage loans for its own
portfolio, giving due consideration to customary and usual standards of practice
of mortgage lenders and loan servicers administering similar mortgage loans and
in accordance with Agency Guidelines, as applicable, but without regard to any
relationship that the Servicer or any Affiliate of the Servicer may have with
the related Mortgagor, or the Servicer's right to receive compensation for its
services hereunder.
"Accounting Based Consolidation Event" shall mean, with respect
to any Conduit Purchaser, the occurrence of any change in accounting standards
or the issuance of any pronouncement or release by any accounting body or any
other body charged with the promulgation or administration of accounting
standards (including, without limitation, the Financial Accounting Standards
Board, the American Institute of Certified Public Accountants or the Securities
and Exchange Commission) or the occurrence of any change in the interpretation
or application of any accounting standard, the effect of which (in any such
event) is to cause or require the consolidation of all or any portion of the
assets and liabilities of such Conduit Purchaser allocable to the Net Investment
with the assets and liabilities of its related Funding Agent or any Affiliate
thereof or the effect of which is to deem all or any portion of the assets and
liabilities of such Conduit Purchaser allocable to the Net Investment to be
consolidated with the assets and liabilities of such Funding Agent or any
Affiliate thereof.
"Adjusted Consolidated Funded Debt" shall mean, on any date of
determination, the sum of (a) the Consolidated Funded Debt of AHMIC and any
other Person which would be reflected on the consolidated balance sheet of AHMIC
prepared in accordance with GAAP if such balance sheet were prepared as of such
date of determination, less (b) 50% of any Subordinated Debt less (c) the
mortgage debt associated with the building and the land located at ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇.
"Administrative Agent" shall mean SG, in its capacity as
administrative agent for the Purchasers, or any successor administrative agent
thereto.
"Administrative Agent Fee" shall mean the "Administrative Agent
Fee" payable to the Administrative Agent, on each Remittance Date as set forth
in the Agent Fee Letter.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under common
control with, such specified Person. For purposes of this definition, "control"
when used with respect to any specified Person shall mean the power to direct
the management and policies of such Person, directly or indirectly, whether
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through the ownership of voting securities, by contract, or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Agency Guidelines" shall mean the FHLMC Guidelines, the FNMA
Guidelines or the GNMA Guidelines, as applicable.
"Agent Fee Letter" shall mean that certain letter agreement dated
as of the date hereof by and between AHM and the Administrative Agent.
"Aggregate Collateral Value" shall mean an amount equal to the
sum of the products of the book values (as determined in accordance with GAAP)
of the consolidated assets of AHMIC and its Subsidiaries, such assets being
categorized in the classes set forth on the calculation schedule that is part of
Exhibit E attached to the Credit Agreement, times the percentage multiplier for
each such class set forth on such calculation schedule.
"AHM" shall have the meaning set forth in the preamble hereto.
"AHMIC" shall mean American Home Mortgage Investment Corp., a
Maryland corporation.
"AHMS" shall have the meaning set forth in the preamble hereto.
"Alt-A Loan" shall mean a Mortgage Loan (other than a Conforming
Loan or a Jumbo Loan) that (i) does not conform to the conventional underwriting
standards of FNMA, FHLMC or GNMA but that is underwritten in a manner designed
to be purchased by an Approved Takeout Investor (other than FNMA, FHLMC or
GNMA), within guidelines generally acceptable to industry norms for "Alt-A"
loans, (ii) has a demonstrated secondary market and is readily securitizable,
and (iii) matches all applicable requirements for purchase under the
requirements of a Takeout Commitment specifically issued for the purchase of
such Mortgage Loan.
"Anticipated Settlement Date" shall mean, with respect to a
Mortgage Loan, the date specified in the related Takeout Confirmation on which
it is anticipated that the Settlement Date will occur.
"Anticipated Takeout Amount" shall mean, with respect to a
Mortgage Loan, the price specified in the related Takeout Confirmation which the
related Approved Takeout Investor has agreed to pay for such Mortgage Loan.
"Applicable Agency" shall mean GNMA, FNMA or FHLMC, as
applicable.
"Applicable Rate" shall mean an amount (expressed as a
percentage) equal to:
(i) if the applicable Purchaser is a Conduit Purchaser
which is funding its share of the Net Investment by issuing its
Commercial Paper, the CP Rate for such Conduit Purchaser; and
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(ii) if the applicable Purchaser is funding its share of
the Net Investment other than by issuing Commercial Paper the sum
of (x) the one-month LIBOR Rate and (y) 1.50%;
provided, however, that (1) with regard to clause (ii) above, if any Purchaser
shall have notified the Administrative Agent that a LIBOR Disruption Event has
occurred, the "Applicable Rate" shall be the Base Rate and (2) following the
occurrence and during the continuance of a Termination Event, the "Applicable
Rate" shall be the Base Rate.
"Appraised Value" shall mean, (i) with respect to any Mortgage
Loan secured by a first priority Mortgage, (A) the lower of the sales price and
the appraised value of the related Mortgaged Property at the time of origination
of such Mortgage Loan, if the Mortgage Loan is a refinance of any existing lien
and the last sale of the Mortgaged Property occurred within 12 months prior to
the origination of such Mortgage Loan, or (B) the appraised value of the related
Mortgaged Property at the time of origination of such Mortgage Loan, if the
Mortgage Loan is a refinance of any existing lien and the last sale of the
Mortgaged Property occurred more than 12 months prior to the origination of such
Mortgage Loan, (C) the lower of the sales price of the related Mortgage Property
at the time of origination of the Mortgage Loan or the appraised value of such
property at such time, if the Mortgage Loan is a purchase money loan, and (ii)
with respect to any Mortgage Loan secured by a second priority Mortgage, (A) if
such Mortgage Loan was originated more than 12 months after the last sale of the
related Mortgaged Property, the appraised value of the related Mortgaged
Property at the time of origination of such Mortgage Loan (or if no appraisal is
obtained in connection with the origination of such Mortgage Loan, the appraised
value of the related Mortgaged Property determined no more than 12 months prior
to the origination of such Mortgage Loan) or (B) if such second priority
Mortgage was originated simultaneously with or not more than 12 months after the
sale of the related Mortgaged Property, the lesser of the appraised value at
origination of such Mortgage Loan (or if no appraisal is obtained in connection
with the origination of such Mortgage Loan, the appraised value of the related
Mortgaged Property determined no more than 12 months prior to the origination of
such Mortgage Loan) and the sales price for such sale of the related Mortgaged
Property.
"Approvals" shall mean, with respect to the Servicer, the
approvals obtained by the Applicable Agency in designation of the Servicer as a
GNMA-approved issuer, a GNMA-approved servicer, a FHA-approved mortgagee, a
VA-approved lender, a FNMA approved lender or a FHLMC-approved Seller/Servicer,
as applicable, in good standing.
"Approved Takeout Investor" shall mean any of (i) an entity
listed on Schedule C hereto, provided, that any entity listed on Schedule C (or
its parent) which is rated by Standard and Poor's and ▇▇▇▇▇'▇ which no longer
has senior long-term unsecured debt ratings of at least BBB+ and Baa1 (or in the
case of ResCap, BBB- and Baa3) by Standard & Poor's and ▇▇▇▇▇'▇, respectively,
shall cease to be an Approved Takeout Investor immediately upon such downgrade,
(ii) a securities dealer or financial institution that has (or its parent has) a
senior long-term unsecured debt rating of at least BBB+ and Baa1 by Standard and
Poor's and ▇▇▇▇▇'▇, respectively, and is specified in writing by the Seller to
the Administrative Agent and each Funding Agent or (iii) an entity which is
acceptable to the Administrative Agent and each of the Funding Agents, on behalf
of the applicable Purchasers, as notified to the Seller in writing by the
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Administrative Agent; provided that upon any default by such Approved Takeout
Investor under any Takeout Commitment issued by it, such entity shall
immediately cease to be an Approved Takeout Investor.
"Assignment and Assumption Agreement" shall mean an Assignment
and Assumption Agreement substantially in the form of Exhibit A attached hereto.
"Base Rate" shall mean, on any day, a rate per annum equal to the
greater of (i) the prime rate of interest announced publicly by SG from time to
time, changing when and as said prime rate changes (such rate not necessarily
being the lowest or best rate charged by SG) and (ii) the sum of (a) 1.50% and
(b) the rate equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day for such transactions received
by SG from three Federal funds brokers of recognized standing selected by it.
"Business Day" shall mean any day other than (i) a Saturday or
Sunday or (ii) any day on which banks in New York City or Chicago, Illinois are
authorized or obligated by law or executive order to be closed.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning set forth in Section 2.02(d).
"Collection Account" shall mean the account designated as such
for the deposit of Collections, established and maintained pursuant to Section
5.02.
"Collection Account Control Agreement" shall mean the Collection
Account Control Agreement with respect to the Collection Account dated the date
hereof among the Seller, the Servicer, the Administrative Agent and the
Custodian, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"Collections" shall mean with respect to each Mortgage Loan, (i)
all amounts received under the related Takeout Commitment or other sale of such
Mortgage Loan and (ii) all principal and interest collections, insurance
proceeds and other cash proceeds relating to such Mortgage Loan.
"Combined Loan-to-Value Ratio shall mean, with respect to any
Mortgage Loan secured by a second priority Mortgage, the fraction, expressed as
a percentage found by dividing (i) the sum of (A) the original principal balance
of such second priority Mortgage Loan and (B) the aggregate unpaid principal
balance, at the time of origination of the second priority Mortgage Loan, of all
other mortgage loans, if any, secured by senior liens on the related Mortgaged
Property by (ii) the Appraised Value of the related Mortgaged Property.
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"Commercial Paper" shall mean, with respect to each Conduit
Purchaser, the promissory notes issued by such Conduit Purchaser in the
commercial paper market.
"Committed Purchaser" shall mean each of the several entities
identified on Schedule A and each entity specified as such in the Assignment and
Assumption Agreement or Joinder Agreement pursuant to which such financial
institution became a party hereto, and their respective successors and assigns.
"Commonly Controlled Entity" of a Person shall mean a person,
whether or not incorporated, which is under common control with such Person
within the meaning of Section 414(c) of the Code.
"Completion Fee" shall mean with respect to any Mortgage Loan, an
amount equal to the product of (i) the aggregate Takeout Amount for the Takeout
Commitment relating to such Mortgage Loan or, if a Takeout Failure occurs with
respect to such Mortgage Loan, the proceeds from the sale of such Mortgage Loan,
and (ii) 2.00%.
"Concentration Limits" shall mean, at any time, after giving
effect to the purchase of any Mortgage Loans, (i) the aggregate Anticipated
Takeout Amounts for all outstanding Takeout Commitments of any individual
Approved Takeout Investor at such time will not exceed the following percentages
of the aggregate Anticipated Takeout Amounts for all outstanding Takeout
Commitments at such time: (A) 30% for each Approved Takeout Investor having a
senior long-term unsecured debt rating of AA- or better by Standard & Poor's and
Aa3 or better by ▇▇▇▇▇'▇; provided, that, for purposes of this definition,
Countrywide Securities Corp. ("CSC") shall be deemed to have satisfied such
ratings requirement unless, subsequent to the date hereof, the senior long-term
unsecured debt rating of CSC is downgraded or placed on "negative watch" by
Standard & Poor's or ▇▇▇▇▇'▇, (B) 20% for each Approved Takeout Investor having
a senior long-term unsecured debt rating of A- or better by Standard & Poor's
and A3 or better by ▇▇▇▇▇'▇, and (C) 10% for all other Approved Takeout
Investors; provided that the Concentration Limit for ResCap shall be 5% so long
as ResCap has a senior long-term unsecured debt rating of BBB- or better by
Standard &Poor's and Baa3 or better by ▇▇▇▇▇'▇, and (ii) the aggregate
Anticipated Takeout Amounts for all outstanding Takeout Commitments of all
Approved Takeout Investors having senior long-term unsecured debt ratings of
less than A- by Standard & Poor's or A3 by ▇▇▇▇▇'▇ shall not exceed 20% of the
aggregate Anticipated Takeout Amounts for all outstanding Takeout Commitments at
such time.
"Conduit Purchaser" shall mean, each of the several commercial
paper conduits identified on Schedule A and each commercial paper conduit
specified as such in the Assignment and Assumption Agreement or Joinder
Agreement pursuant to which such commercial paper conduit became a party hereto,
and their respective permitted successors and assigns.
"Conforming Loan" shall mean (i) a Mortgage Loan that complies
with all applicable requirements for purchase under a FNMA, FHLMC, GNMA or
similar Governmental Authority standard form of conventional mortgage loan
purchase contract, then in effect, or (ii) an FHA Loan or a VA Loan.
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"Consolidated Funded Debt" shall mean, with respect to any Person
and on any date of determination, Indebtedness in any of the following
categories:
(i) Debt for borrowed money, including the Credit
Agreement Obligations;
(ii) Debt constituting an obligation to pay the deferred
purchase price of property;
(iii) Debt evidenced by a bond, debenture, note or similar
instrument;
(iv) Debt constituting, as of any date, any lease of
property, real or personal, which would be capitalized on a
balance sheet of the lessee prepared as of such date in
accordance with GAAP, together with any other lease by such
lessee which is in substance a financing lease, including,
without limitation, any lease under which (i) such lessee has or
will have an option to purchase the property subject thereto at a
nominal amount or any amount less than a reasonable estimate of
the fair market value of such property as of the date such lease
is entered into, or (ii) the term of the lease approximates or
exceeds the expected useful life of the property leased
thereunder.
(v) Debt constituting a non-contingent obligation to
reimburse the issuer of any letter of credit or any guarantor or
surety for payments made by such issuer, guarantor or surety; and
(vi) Any obligation under any guaranty with respect to
Debt of any other Person of the types described in clauses (i)
through (v) above.
"Co-op Assignment" shall mean, with respect to a Co-op Loan, the
original assignment or other documents evidencing the assignment to the Seller
as the last endorsee or its assigns of the original lender's liens on the
related Co-op Lease and Co-op Stock Certificates.
"Co-op Documents" shall mean, with respect to a Co-op Loan (i)
the originals of the related Co-op Assignment, Co-op Form UCC-3 and Co-op Stock
Certificates, and (ii) certified copies of the related Co-op Lease and the
pledge agreement creating a lien on the related Co-op Stock Certificates.
"Co-op Form UCC-3" shall mean the Form UCC-2 or 3 under the UCC
as in effect in the applicable jurisdiction reflecting the assignment of the
security interest of the institution originating a Co-op Loan (and the related
Form UCC-1).
"Co-op Lease" shall mean, with respect to a Co-op Loan, the lease
with respect to the dwelling unit in the related residential cooperative housing
corporation occupied by the related Mortgagor.
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"Co-op Loan" means a Mortgage Loan secured by the pledge of stock
allocated to a dwelling unit in a residential cooperative housing corporation
and a collateral assignment of the related Co-op Lease.
"Co-op Stock Certificates" means, with respect to a Co-op Loan,
the stock certificate or certificates representing the stock allocated to the
related dwelling unit of the related residential cooperative housing corporation
pledged with respect to such Co-op Loan, with a stock power executed in blank
attached.
"CP Rate" shall mean, on any day for any Conduit Purchaser, the
per annum rate equivalent to the "weighted average cost" (as defined below)
related to the issuance of Commercial Paper that is allocated, in whole or in
part, to fund such Conduit Purchaser's share of the Net Investment (and which
may also be allocated in part to the funding of other assets of such Conduit
Purchaser); provided, however, that if any component of such rate is a discount
rate in calculating the CP Rate for such Conduit Purchaser's share of the Net
Investment for such date, the rate used to calculate such component of such rate
shall be a rate resulting from converting such discount rate to an interest
bearing equivalent rate per annum. As used in this definition, the "weighted
average cost" shall consist of (x) the actual interest rate paid to purchasers
of Commercial Paper issued by such Conduit Purchaser, (y) the costs associated
with the issuance of such Commercial Paper (including dealer fees and
commissions to placement agents), and (z) interest on other borrowing or funding
sources by such Conduit Purchaser (other than under any Program Support
Agreement), including to fund small or odd dollar amounts that are not easily
accommodated in the commercial paper market.
"Credit Agreement" shall mean the Second Amended and Restated
Credit Agreement, dated as of August 10, 2006, as may be amended from time to
time, by and among AHMIC, AHM, AHMS, American Home Mortgage Acceptance, Inc.,
certain lenders from time to time party thereto, and Bank of America, N.A.
"Credit Agreement Obligations" shall mean any and all debts,
obligations and liabilities of AHM, the Servicer, the Performance Guarantors and
American Home Mortgage Acceptance, Inc. to Bank of America, N.A. as
administrative agent under the Credit Agreement and the lenders from time to
time party thereto (whether now existing or hereafter arising, voluntary or
involuntary, whether or not jointly owed with others, direct or indirect,
absolute or contingent, liquidated or unliquidated, and whether or not from time
to time decreased or extinguished and later increased, created or incurred),
arising out of or related to the Loan Documents (as defined in the Credit
Agreement).
"Credit and Collection Policy" shall mean those credit and
collection policies and practices of the Seller and the Servicer, in existence
on the date hereof, relating to originating, servicing and enforcing mortgage
loans and the foreclosure and liquidation of the related mortgaged properties,
as modified from time to time in accordance with this Agreement.
"Credit File" shall mean all Mortgage Loan papers and documents
required to be maintained pursuant to the Sale Agreement, and all other papers
and records of whatever kind or description whether developed or originated by
the Seller or others, required by law to document
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or service the Mortgage Loan; provided, however, that such Mortgage Loan papers,
documents and records shall not include any Mortgage Loan papers, documents or
records which are contained in the Custodial File.
"Cure Date" shall mean, with respect to any Mortgage Loan, the
date occurring 15 days after the Anticipated Settlement Date.
"Custodial Agreement" shall mean the Custodial Agreement, dated
as of the date hereof among the Seller, the Servicer, the Administrative Agent
and the Custodian.
"Custodial File" shall mean, with respect to each Mortgage Loan,
the documents that are required to be delivered to the Custodian pursuant to the
Custodial Agreement.
"Custodian" shall mean (i) Deutsche Bank National Trust Company
or (ii) any successor custodian which (A) has appropriate trust powers to act as
a custodian of the Mortgage Loans, (B) enters into an agreement substantially
similar to the Custodial Agreement, and (C) satisfies the criteria established
by each Applicable Agency for qualified custodians and such other criteria
reasonably determined by the Administrative Agent (in consultation with the
Funding Agents).
"Daily Report" shall mean a report in the substantially the form
of Exhibit C attached hereto and executed and delivered by a Servicing Officer.
"Debt" shall mean (a) all indebtedness or other obligations of a
Person (and, if applicable, that Person's subsidiaries, on a consolidated basis)
that, in accordance with GAAP consistently applied, would be included in
determining total liabilities as shown on the liabilities side of a balance
sheet of that Person on the date of determination, plus (b) all indebtedness of
other obligations of that Person (and, if applicable, that Person's
subsidiaries, on a consolidated basis) for borrowed money or for the deferred
purchase price of property or services. For purposes of calculating a Person's
Debt, Subordinated Debt (as defined below) not due within one year of that date
may be excluded from that Person's indebtedness. For purposes of this
definition, "Subordinated Debt" shall mean all indebtedness of a Person for
borrowed money that is effectively subordinated in right of payment to all other
present and future obligations on terms acceptable to the Required Funding
Agents.
"Debtor Laws" shall mean all applicable liquidation,
conservatorship, bankruptcy, fraudulent transfer or conveyance, moratorium,
arrangement, receivership, insolvency, reorganization or similar laws from time
to time in effect affecting the rights of creditors generally.
"Defective Mortgage Loan" shall mean, (a) a Mortgage Loan for
which, either (i) the Document File does not contain a document required to be
contained therein, (ii) a document within a Document File is, in the reasonable
judgment of the Administrative Agent, any Funding Agent or the applicable
Approved Takeout Investor, defective or inaccurate in any material respect, as
determined upon evaluation of the Document File against the requirements of the
related Sale Agreement, (iii) a document in the Document File is not legal,
valid or binding, or
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(iv) one of the representations and warranties in Section 6.02 hereof has been
breached as of the related Purchase Date or (b) a Wet Loan for which any of the
items in the related Custodial File have not been delivered to the Custodian
within ten (10) days of the related Purchase Date.
"Delinquent Mortgage Loan" shall mean a Mortgage Loan under which
the Mortgagor has missed two (2) Monthly Payments in a row as measured by the
Office of Thrift Supervision method of delinquency or the Mortgagor has taken
any action, or suffered any event of the type described in Sections 8.1(d),
8.1(e) or 8.1(f) or is in foreclosure.
"Document File" shall mean the Credit File and the Custodial
File.
"Electronic Tracking Agreement" shall mean the Electronic
Tracking Agreement dated the date hereof among the Administrative Agent, the
Seller, the Servicer, MERS and MERSCORP, INC., as such agreement may be amended,
restated, supplemented or otherwise modified from time to time.
"Eligible Assignee" shall mean (i) each Funding Agent, each
Committed Purchaser or any of their Affiliates, (ii) any Person managed by any
Funding Agent, any Committed Purchaser or any of their Affiliates, or (iii) any
financial or other institution that is acceptable to the Funding Agent related
to the Purchaser that is making the assignment and, unless a Termination Event
has occurred or is continuing, the Seller (which consent shall not be
unreasonably withheld).
"Eligible Institution" shall mean a depository institution (which
may be the Administrative Agent) organized under the laws of the United States
or any one of the states thereof, including, the District of Columbia (or any
U.S. branch of a foreign depository institution), which is a member of the FDIC,
and either (i) which at all times has a short-term unsecured debt rating of at
least "P-1" by Moody's, at least "A-1" by Standard & Poor's and, if rated by
Fitch, at least "F1" by Fitch or (ii) which shall have corporate trust powers
with accounts subject to regulations regarding fiduciary funds on deposit
substantially similar to 12 C.F.R. Section 9.10(b).
"Eligible Investments" shall mean:
(a) direct obligations of, or guaranteed as to the full and
timely payment of principal and interest by, the United States or obligations of
any agency or instrumentality thereof, if such obligations are backed by the
full faith and credit of the United States;
(b) federal funds, certificates of deposit, time deposits and
bankers' acceptances (which shall each have an original maturity of not more
than 90 days and, in the case of bankers' acceptances, shall in no event have an
original maturity of more than 365 days) of any United States depository
institution or trust company organized under the laws of the United States or
any state and subject to examination and supervision by federal or state
financial institutions regulatory authorities; provided, however, that the
short-term obligations of such depository institution or trust company are rated
"A-1+" by Standard & Poor's, "P-1" by Moody's and, if rated by Fitch, "F1+" by
Fitch;
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(c) commercial paper (having original maturities of not more than
30 days) of any corporation incorporated under the laws of the United States or
any state thereof which on the date of the acquisition are rated "A-1+" by
Standard & Poor's, "P-1" by Moody's and, if rated by Fitch, "F1+" by Fitch;
(d) securities of money market funds rated "Aam" or better by
Standard & Poor's, "Aa" or better by Moody's and, the highest such ratings
category by Fitch (if rated by Fitch); and
(e) any other investment approved in writing by the
Administrative Agent;
provided that in the case of each of the investments described above, such
investment is a "securities entitlement" within the meaning of Section 8-102(17)
of the UCC.
Any such Eligible Investment may be purchased by or through the
Administrative Agent or any of its Affiliates.
"Eligible Mortgage Loan" shall mean a Mortgage Loan that, as of
the related Purchase Date:
(a) (i) is a closed and fully funded Mortgage Loan; (ii) has a
maximum term of maturity of 40 years and the proceeds of which were used either
to finance a portion of the purchase price of a Mortgaged Property encumbered by
the related Mortgage or to refinance a loan secured by such Mortgaged Property,
(iii) is secured by a perfected first or second priority Mortgage on residential
real property consisting of land and a one-to-four family dwelling thereon which
is completed and ready for owner occupancy, including co-operative units,
townhouses and condominiums, (iv) was underwritten according to the Seller's
Underwriting Guidelines and was originated or purchased by the Seller and (v)
that Seller has full right to sell, assign and transfer without the consent of
the related Mortgagor;
(b) is a Conforming Loan, a Second Lien Loan, a Jumbo Loan or an
Alt-A Loan;
(c) the Seller has agreed to sell and an Approved Takeout
Investor has agreed to buy at a specified price under a Takeout Commitment to be
settled on or before a pre-determined Settlement Date and is subject to a
Takeout Commitment which the Seller has the full right to sell, assign or
transfer either without the consent of the related Approved Takeout Investor or
with the consent of the Approved Takeout Investor and such consent has been
obtained and for which a Trade Assignment, executed by the Seller, has been
delivered to the related Approved Takeout Investor;
(d) satisfies, and has been originated in accordance with and
complies with, all applicable requirements of the Credit and Collection Policy
and, with respect to any Conforming Loan, which also satisfies and has been
originated in accordance with, all applicable requirements of the applicable
Agency Guidelines;
(e) with respect to which the related Mortgaged Property is
located within the United States or one of its territories;
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(f) in which the Administrative Agent has been granted and has a
perfected, first-priority, ownership interest for the benefit of the Purchasers;
(g) for which there exists only one original Mortgage Note and
such Mortgage Note is payable to or endorsed (without recourse) in blank and
each of such Mortgage Loan and the related Mortgage Note is a legal, valid and
binding obligation of the Mortgagor thereof;
(h) for which, other than in respect of Wet Loans, the Custodial
Files have been received by the Custodian and are in form and substance
acceptable to the Custodian pursuant to the terms of the Custodial Agreement;
(i) with respect to which the related Mortgaged Property is not
subject to any delinquent tax or assessment lien;
(j) with respect to which the related Mortgagor is not an
Affiliate of the Seller or the Purchasers, and is not a government or a
governmental subdivision or agency; provided, however, that an otherwise
"Eligible Mortgage Loan" owed by an Affiliate of the Seller shall not be
excluded under this clause (j), to the extent that such Mortgage Loan complies
with the Credit and Collection Policy and is otherwise an "arm's length"
transaction;
(k) (i) if such Mortgage Loan is an FHA Loan or VA Loan, has a
minimum FICO score of 550 and (ii) if such Mortgage Loan is not an FHA Loan or
VA Loan (A) has a minimum FICO score of 640 and (B) the FICO score of which,
when included in the weighted average of all FICO scores for all Mortgage Loans,
does not cause such weighted average FICO score to be less than 690;
(l) is eligible for inclusion in a mortgage-backed securities
transaction for similar loans;
(m) is not a Section 32 Loan or a "High Cost Home Loan" within
the meaning of the Georgia Fair Lending Act and which, if such Mortgage Loan is
a "Covered Loan" within the meaning of the Georgia Fair Lending Act, the Seller
has ensured, among other things, that if such Covered Loan refinances an
existing "Home Loan" (as such term is defined in the Georgia Fair Lending Act)
that was consummated within the previous five years, the Covered Loan has
provided a reasonable, tangible net benefit to the Seller considering all of the
circumstances;
(n) simultaneously with the purchase by the Administrative Agent,
for the benefit of the Purchasers hereunder, is owned by the Seller free and
clear of any Lien of any other Person other than the Administrative Agent for
the benefit of the Purchasers;
(o) together with the related Mortgage Loan and Mortgage Note,
does not contravene any Governmental Requirements applicable thereto (including,
without limitation, the Real Estate Settlement Procedures Act of 1974, as
amended, and all laws, rules and regulations relating to usury,
truth-in-lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices, privacy and other applicable
federal, state and local consumer protection laws) and with respect to which no
party to the related Mortgage Loan and Mortgage Note is in violation of any
Governmental Requirements (or procedure prescribed
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thereby) if such violation would impair the collectability of such Mortgage Loan
or the saleability of such Mortgage Loan under the applicable Takeout
Commitment;
(p) (i) is not a Delinquent Mortgage Loan; (ii) has not
previously been sold to an Approved Takeout Investor and repurchased by Seller;
(iii) has a Loan-to-Value Ratio not in excess of 100%, and if its Loan-to-Value
Ratio is in excess of 80% it has primary mortgage insurance; (iv) has a Combined
Loan-to-Value Ratio not in excess of 100% if such Mortgage Loan is secured by a
second priority Mortgage, and (v) has an original principal balance not in
excess of $3,000,000;
(q) is denominated and payable in United States dollars within
the United States and the Mortgagor of which is a natural person who is a United
States citizen or resident alien or a corporation or an inter vivos revocable
trust or other legal entity organized under the laws of the United States or any
State thereof or the District of Columbia;
(r) is not, and the obligation of the related Approved Takeout
Investor to pay the related Anticipated Takeout Amount is not, subject to any
right of rescission, setoff, counterclaim or other dispute whatsoever;
(s) is covered by the types and amounts of insurance required by
Section 6.05(f)(ii);
(t) with respect to which all applicable loan level
representations and warranties made by the related Seller in this Agreement are
true and correct in all material respects and with respect to which all
applicable loan level covenants made in this Agreement have been complied with;
(u) is subjected to the following "Quality Control" measure by
personnel of the Seller before the Mortgage Note is funded by the Seller: for
those Mortgage Loans not originated by the Seller, is subject to being selected
at random for a review for thoroughness and compliance (including
truth-in-lending, good faith estimates and other disclosures);
(v) was originated no more than 90 days prior to the Anticipated
Settlement Date with respect to such Mortgage Loan; (w) the Anticipated
Settlement Date for such Mortgage Loan is no more than 45 days after the related
Purchase Date for such Mortgage Loan;
(x) for which the Mortgagor is required to make monthly payments
of principal and/or interest;
(y) with respect to which all representations and warranties made
by the Seller under the related Sale Agreement and Takeout Commitment and any
related document or agreement are true and correct in all material respects;
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(z) was originated in compliance with local, state and federal
law applicable thereto at the time of origination, including without limitation,
required disclosures of points, charges and fees;
(aa) was originated using credit policies in effect at the time
of such origination, which were designated to provide guidelines in underwriting
the creditworthiness of the Mortgagors and to determine the Mortgagors' ability
to repay the debt, and in accordance with such policies, the Seller considered,
among other things, the credit history of the Mortgagor and other credit
indicators such as income verification and/or debt-to-income ratios of the
Mortgagor, and was not originated based solely on an estimation of the value of
the mortgaged property without any consideration of the potential ability of the
Mortgagor to repay the amount owed under the Mortgage Loan;
(bb) complies with the provisions of the Home Ownership and
Equity Protection Act of 1994 (15 U.S.C. ss. 1602(aa)) or Regulation Z (12
C.F.R. 226.32);
(cc) for which (i) the Mortgagor was not required to purchase any
credit life, disability, accident or health insurance product as a condition of
obtaining the Mortgage Loan, and (ii) the Mortgagor has not obtained a prepaid
single-premium credit life, disability, accident or health policy in connection
with the origination of the Mortgage Loan;
(dd) satisfies, and for which the Seller has satisfied, all
criteria, covenants and conditions specified in the applicable Sale Agreement
and Takeout Confirmation with respect to the applicable Takeout Commitment which
must be satisfied in order for such Mortgage Loan to be purchased at the
Anticipated Takeout Amount by the applicable Approved Takeout Investor on the
Anticipated Settlement Date; and
(ee) with respect to which, if such Mortgage Loan is a Co-Op
Loan, (1) the co-operative project is undamaged, (2) there is no breach,
default, violation or event of acceleration existing under the mortgage secured
by the co-operative project, (3) the related co-operative housing corporation is
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its formation and it has requisite power and authority to own
its properties and transact the business in which it is engaged, and (4) the
related co-operative housing corporation is in compliance in all material
respects with all applicable legal requirements and it is not in default or
violation of any order, writ, injunction, decree, or demand of any governmental
authority, the violation of which might material adversely affect the condition
(financial or otherwise) or business of the cooperative housing corporation.
"Employee Plan" shall mean an employee pension benefit plan
covered by Title IV of ERISA and established or maintained by any of the Seller,
the Servicer or any ERISA Affiliate.
"Enforceability Exceptions" shall mean the inability of any
Person to enforce its legal or equitable remedies against any other Person due
to (i) bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally, and (ii) general
principles of equity, including, without limitation, concepts of materiality,
14
reasonableness, good faith and fair dealing and the possible unavailability of
specific performance, regardless of whether considered in a proceeding at equity
or at law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" shall mean any corporation, trade or business
that is a member of a controlled group of corporations or a controlled group of
trades or businesses, as described in Sections 414(b), (c), (m) and (o) of the
Code, or Section 4001 of ERISA, of which the Performance Guarantors are members.
"Excluded Taxes" has the meaning given to such term in Section
7.03 hereof.
"Fall-Out Loan" shall mean a Mortgage Loan purchased hereunder
which was not purchased by the related Approved Takeout Investor pursuant to the
related Takeout Commitment within 15 days after the Anticipated Settlement Date
for a purchase price equal to the Anticipated Takeout Amount for such Mortgage
Loan.
"Fall-Out Rate" shall mean, for any calendar month, a fraction
(expressed as a percentage) having as its numerator the aggregate outstanding
principal balance of all Mortgage Loans purchased hereunder during such calendar
month that are Fall-Out Loans, and the denominator of which is the aggregate
outstanding principal balance of all Mortgage Loans purchased hereunder during
such calendar month.
"FDIC" shall mean the Federal Deposit Insurance Corporation, or
its successors and assigns.
"Fee Letter" shall mean (a) that certain letter agreement dated
as of the date hereof by and among the Seller, the Funding Agents, on behalf of
the applicable Purchasers which are original signatories hereto, and the
Administrative Agent; and (b) each letter agreement dated as of the Effective
Date (as defined in the applicable Joinder Agreement) of any Joinder Agreement
by and among the Seller, the Funding Agent for the Purchaser Group becoming a
party hereto pursuant to such Joinder Agreement, on behalf of the applicable
Purchasers, and the Administrative Agent.
"FHA" shall mean the Federal Housing Administration, which is a
sub-division of HUD, or any successor thereto. The term "FHA" is used
interchangeably in this Agreement with the term "HUD".
"FHA Loan" shall mean a Mortgage Loan, the ultimate payment of
which is partially or completely insured by the FHA or with respect to which
there is a current, binding and enforceable commitment for such insurance issued
by the FHA.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation,
or any successor thereto.
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"FHLMC Guidelines" shall mean the ▇▇▇▇▇▇▇ Mac Seller and Servicer
Guidelines, as such guidelines may hereafter from time to time be amended.
"FICO Score" shall mean, with respect to the Mortgagor under a
particular Mortgage Loan, a credit rating established by Fair ▇▇▇▇▇ Corporation.
"Fitch" shall mean Fitch, Inc. and any successor thereof.
"Fiscal Year" shall mean the twelve-month period ending on the
last calendar day of each December, provided, that the Seller may elect to
change its "Fiscal Year" in accordance with Section 6.06(b).
"FNMA" shall mean ▇▇▇▇▇▇ ▇▇▇, formerly known as the Federal
National Mortgage Association, or any successor thereto.
"FNMA Guidelines" shall mean the ▇▇▇▇▇▇ Mae MBS Selling and
Servicing Guidelines, as such guidelines may hereafter from time to time be
amended.
"Funding Agent" shall mean, with respect to any Conduit Purchaser
and its Related Committed Purchasers, each entity set forth opposite such
Conduit Purchaser's name on Schedule A, or the entity identified as such on the
Assignment and Assumption Agreement or Joinder Agreement pursuant to which such
entity became a party hereto, and their respective permitted successors and
assigns.
"GAAP" shall mean generally accepted accounting principles
consistently applied in the United States.
"Governmental Authority" shall mean any applicable nation or
government, any agency, department, state or other political subdivision
thereof, or any instrumentality thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government. Governmental Authority shall include, without limitation, each of
FHLMC, FNMA, FHA, HUD, VA and GNMA.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other requirement (including,
without limitation, any of the foregoing that relate to energy regulations and
occupational, safety and health standards or controls and any hazardous
materials laws) of any Governmental Authority that has jurisdiction over the
Seller, the Servicer or any of their respective properties.
"GNMA" shall mean the Government National Mortgage Association or
any successor thereto.
"GNMA Guidelines" shall mean the GNMA Mortgage-Backed Securities
Guide I or II, as such Guidelines may hereafter from time to time be amended.
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"HUD" shall mean the United States Department of Housing and
Urban Development, or any federal agency or official thereof which may from time
to time succeed to the functions thereof with regard to FHA Insurance. The term
"HUD" is used interchangeably in this Agreement with the term "FHA".
"Indebtedness" shall mean, for any Person, without duplication,
and at any time, (a) all obligations required by GAAP to be classified on such
Person's balance sheet as liabilities, (b) obligations secured (or for which the
holder of the obligations has an existing contingent or other right to be so
secured) by any Lien existing on property owned or acquired by such Person, (c)
obligations that have been (or under GAAP should be) capitalized for financial
reporting purposes, and (d) all guaranties, endorsements, and other contingent
obligations with respect to obligations of others.
"Indemnified Claims" shall mean Section 7.02 Costs, Taxes and/or
Losses, as the context requires.
"Indemnified Parties" shall have the meaning specified in Section
7.01.
"Initial Purchase Date Notice" shall have the meaning specified
in Section 2.01(b) hereof.
"Interest Period" shall mean, with respect to each Mortgage Loan,
the period commencing on the Purchase Date of such Mortgage Loan and ending on
the applicable Settlement Date for such Mortgage Loans.
"Investment Company Act" shall mean the Investment Company Act
of 1940, as amended from time to time, and any successor statute.
"Joinder Agreement" shall mean a joinder agreement substantially
in the form set forth in Exhibit B hereto pursuant to which the members of a new
Purchaser Group become parties to this agreement.
"Jumbo Loan" shall mean a Mortgage Loan (other than a Conforming
Loan) that (i) is underwritten in a manner designed to be purchased by an
Approved Takeout Investor (other than FNMA, FHLMC or GNMA), (ii) matches all
applicable requirements for purchase under the requirements of a Takeout
Commitment issued for the purchase of such Mortgage Loan, and (3) differs from a
Conforming Loan solely because the principal amount of such Mortgage Loan
exceeds the limit set for Conforming Loans by FNMA, FHLMC or GNMA from time to
time, but shall not exceed $999,999; provided, however, that a Jumbo Loan having
an original principal balance in excess of $999,999 but not more than $3,000,000
shall qualify as a Super Jumbo Loan. The term Jumbo Loan includes Super Jumbo
Loans.
"LIBOR Business Day" shall mean, with respect to the
determination of the LIBOR Rate, any Business Day, other than a Business Day on
which banking institutions in London, England trading in dollar deposits in the
London interbank market are authorized or obligated by law or executive order to
be closed.
17
"LIBOR Disruption Event" shall mean, with respect to any Interest
Period, any of the following: (a) a determination by any Committed Purchaser or
Liquidity Provider that it would be contrary to law or to the directive of any
central bank or other governmental authority (whether or not having the force of
law) to obtain dollars in the London interbank market to make, fund or maintain
its portion of the Net Investment during such Interest Period, (b) the failure
of all of the sources listed in the definition of "LIBOR Rate" to publish a
London interbank offered rate as of 11:00 a.m. on the second Business Day prior
to the first day of such Interest Period, (c) a determination by any Committed
Purchaser or Liquidity Provider that the rate at which deposits of United States
dollars are being offered in the London interbank market does not accurately
reflect the cost to such Person of making, funding or maintaining its portion of
the Net Investment for such Interest Period or (d) the inability of any
Committed Purchaser or Liquidity Provider, because of market events not under
the control of such Committed Purchaser or Liquidity Provider, to obtain United
States dollars in the London interbank market to make, fund or maintain its
portion of the Net Investment for such Interest Period.
"LIBOR Rate" shall mean, for any applicable period, the rate per
annum (rounded upward, if necessary, to the nearest whole multiple of 1/16th of
one percent) appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in U.S. dollars in a principal amount
of at least $1,000,000 for such period at approximately 11:00 a.m. (London time)
two LIBOR Business Days prior to the first day of such period divided by the
remainder of one minus the LIBOR Reserve Percentage applicable on such day. If
for any reason such rate is not available for any day, the rate per annum
(rounded upward, if necessary, to the nearest whole multiple of 1/16th of one
percent) appearing on such other replacement quotation service such as the
Reuters Screen LIBO Page or the Bloomberg L.P. Screen LIBO Page.
"LIBOR Reserve Percentage" shall mean, as of any day, the
percentage (expressed as a decimal) in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirements applicable to "Eurocurrency
Liabilities" pursuant to Regulation D or any other applicable regulation of the
Board of Governors of the Federal Reserve System (or any successor) which
prescribes reserve requirements applicable to "Eurocurrency Liabilities" as
currently defined in Regulation D.
"Lien" shall mean any security interest, mortgage, deed of trust,
charge, pledge, hypothecation, assignment, deposit arrangement, equity,
encumbrance, lien (statutory or other), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational purposes only)
or comparable law of any jurisdiction to evidence any of the foregoing.
"Liquidity Provider" shall mean the Person or Persons who will
provide liquidity support to a Conduit Purchaser pursuant to a Liquidity
Provider Agreement.
18
"Liquidity Provider Agreement" shall mean an agreement between a
Conduit Purchaser and a Liquidity Provider evidencing the obligation of such
Liquidity Provider to provide liquidity support to such Conduit Purchaser in
connection with the issuance by such Conduit Purchaser of Commercial Paper.
"Loan Agreement" shall mean that certain Amended and Restated
Loan Agreement dated as of November 22, 2005 among AHM SPV I, LLC, as the
Borrower, AHMS, as the Servicer, the Issuers, Banks and Managing Agents party
thereto and Calyon New York Branch, as Administrative Agent, as the same may be
amended from time to time.
"Loan Management System" shall mean the computerized electronic
loan management system maintained by Servicer for the Mortgage Loans.
"Loan-to-Value Ratio" shall mean, with respect to any Mortgage
Loan, the fraction, expressed as a percentage found by dividing the original
principal balance of a Mortgage Loan by the Appraised Value.
"Losses" shall mean any and all damages, losses, claims,
liabilities, costs and expenses, including, without limitation, reasonable
attorneys' fees (which such attorneys may be employees of an Indemnified Party)
and disbursements incurred by any Person specified; provided that Losses shall
not include any special, indirect, consequential and punitive losses,
liabilities or damages (including lost profits) unless such special, indirect,
consequential and punitive losses, liabilities or damages have been awarded
against the applicable Indemnified Party seeking indemnification.
"Material Adverse Effect" shall mean, with respect to any Person,
any material adverse effect on (i) the validity or enforceability of this
Agreement or any other Principal Agreement, (ii) the business, operations, total
property or financial condition of such Person taken as a whole, (iii) the
Collateral taken as a whole, (iv) the ownership interest of the Administrative
Agent and the Purchasers in the Mortgage Loans or Takeout Commitments, or the
enforceability or priority of the Lien in favor of the Administrative Agent on
any material portion of the Collateral, or (v) the ability of such Person to
fulfill its obligations under this Agreement or any other Principal Agreement.
"Maximum Purchase Limit" shall mean $500,000,000 or such greater
or lesser amount determined pursuant to Section 2.06(b) hereof.
"Maximum Purchase Limit Increase Notice" shall have the meaning
given to such term in Section 2.06(b) hereof.
"MERS" shall mean Mortgage Electronic Registration Systems, Inc.,
a Delaware corporation.
"MERS Designated Mortgage Loan" shall mean a Mortgage Loan
registered to or by the Seller on the MERS electronic mortgage registration
system.
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"Monthly Payment" shall mean the scheduled monthly payment of
principal and/or interest on a Mortgage Loan.
"Monthly Statement" shall mean the statement required to be
prepared by Servicer on a monthly basis pursuant to Section 6.05(q),
substantially in the form attached hereto as Exhibit E.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc. and any
successor thereof.
"Mortgage" shall mean the mortgage, deed of trust or other
instrument creating a first-lien or second-lien on a fee simple estate in
Mortgaged Property securing a Mortgage Note.
"Mortgage Loan" shall mean a residential mortgage loan owned by
AHM which the Administrative Agent purchases, on behalf of the Purchasers on a
Purchase Date, and which is included in a Mortgage Pool and which is secured by
a Mortgage on residential real estate or a lien on the stock of Mortgagor
allocated to such Mortgagor's dwelling unit in a residential cooperative housing
corporation.
"Mortgage Loan Assets" shall have the meaning set forth in
Section 2.02(a).
"Mortgage Note" shall mean the original executed promissory note
or other evidence of the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Pool" shall mean a pool of Mortgage Loans which the
Administrative Agent purchases, on behalf of the Purchasers, on a Purchase Date.
"Mortgaged Property" shall mean the underlying real property
located in any state of the United States and subject to a Mortgage (including,
without limitation, all buildings, improvements and fixtures thereon and all
additions, alterations and replacements made at any time with respect to the
foregoing) securing a Mortgage Loan; provided, however, in the case of a Co-op
Loan, "Mortgaged Property" shall mean the real estate in which the related
Mortgagor has an interest by virtue of its stock ownership in a residential
cooperative housing association.
"Mortgagor" shall mean the obligor(s) on a Mortgage Note.
"Multiemployer Plan" shall mean a multiemployer plan defined in
Sections 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to which
Seller or any ERISA Affiliate is required to make contributions.
"Net Cash Proceeds" shall mean, with respect to the issuance of
any capital stock by AHMIC, the amount of cash received by AHMIC in connection
with such transaction after deducting therefrom all fees (including, without
limitation, investment banking fees), commissions, costs and other expenses to
the extent attributable to such transaction.
"Net Investment" shall mean an amount equal to (a) the sum of the
aggregate Purchase Prices paid for the Mortgage Loans by the Purchasers in
accordance with Section 2.01, minus (b) the Collections and other amounts
received and distributed on account of such Net
20
Investment pursuant to Sections 5.03, 5.04 or 5.05; provided, however, that if
the Net Investment shall have been reduced by any distribution of any portion of
Collections or other amounts and thereafter such distribution is rescinded or
must otherwise be returned for any reason, the Net Investment shall be increased
by the amount of such distributions, all as though such rescinded or returned
distribution had not been made.
"Nonrenewing Amount" has the meaning given to such term in
Section 2.08 hereof.
"Officer's Certificate" shall mean a certificate signed by any
Senior Vice President or more senior officer of the Seller or the Servicer, and
delivered to the Administrative Agent.
"Opinion of Counsel" shall mean a written opinion of counsel to
the indicated party.
"Option ARM Loan" shall mean a Mortgage Loan which (i) provides
for the adjustment of the interest rate payable in respect thereof, (ii)
provides the Mortgagor with multiple Monthly Payment options and (iii) may
result in a portion of the interest accrued on such Mortgage Loan in any month
which exceeds the related Monthly Payment for such month to be added to the
principal balance thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established under ERISA, or any successor thereto.
"Performance Guarantors" shall mean, together, American Home
Mortgage Holdings, Inc., a Delaware corporation, and AHMIC, and their respective
successors and assigns.
"Performance Guaranty" shall mean the Performance Guaranty of
even date herewith made by the Performance Guarantors in favor of the
Administrative Agent for the benefit of the Purchasers, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"Person" shall mean an individual, partnership, corporation
(including a business trust), joint-stock company, limited liability company,
trust, unincorporated association, joint venture, government (or any agency or
political subdivision thereof) or other entity.
"Plan" shall mean as to any Person, any pension plan that is
covered by Title IV of ERISA and in respect of which such Person or a Commonly
Controlled Entity of such Person is an "employer" as defined in Section 3(5) of
ERISA.
"Potential Termination Event" shall mean an event which, with the
giving of notice or the passage of time or both, would constitute a Termination
Event.
"Principal Agreements" shall mean this Agreement, the Sale
Agreements, the Takeout Commitments, the Takeout Confirmations, the Trade
Assignments, the Collection Account Control Agreement, the Custodial Agreement,
the Performance Guaranty, the
21
Electronic Tracking Agreement, the Fee Letter, the Agent Fee Letter and any and
all other agreements or instruments now or hereafter executed or delivered by or
on behalf of the Seller or the Servicer in connection therewith, as any of the
same are amended, restated, supplemented or otherwise modified from time to
time.
"Principal Mortgage Documents" shall mean:
(i) the original of each Mortgage Note, endorsed in blank
(without recourse) and all intervening endorsements
thereto;
(ii) an original executed assignment in blank for each
Mortgage securing such Mortgage Loan, in recordable form,
executed by the Seller, in the case of each Mortgage Loan
that is not a MERS Designated Mortgage Loan (or, if such
Mortgage Loan is a Co-op Loan, the related Co-op Documents
referred to in clause (i) of the definition of Co-op
Documents); and
(iii) a certified copy of the executed Mortgage related to
such Mortgage Note (or, if such Mortgage Loan is a Co-op
Loan, the related Co-op Documents referred to in clause
(ii) of the definition of Co-op Documents).
"Pro Rata Share" shall mean, for a Purchaser Group at any time of
determination, a fraction (expressed as a percentage) having the Purchaser Group
Limit for such Purchaser Group as its numerator and the Maximum Purchase Limit
as its denominator; provided, however, that if any Purchaser fails to fund any
amount as required hereunder, "Pro Rata Share" shall mean, for purposes of
making all distributions hereunder, a fraction (expressed as a percentage)
having the actual portion of the outstanding Net Investment funded by each
Purchaser Group as its numerator and the outstanding Net Investment as its
denominator.
"Program Fee" shall mean the fee payable to each Funding Agent,
on behalf of the applicable Conduit Purchaser(s), on each Remittance Date as set
forth in the Fee Letter.
"Program Support Agreement" shall mean an agreement between a
Conduit Purchaser and a Program Support Provider evidencing the obligation of
such Program Support Provider to provide liquidity or credit enhancement or
asset purchase facilities for or in respect of any assets or liabilities of any
Conduit Purchaser in connection with the issuance by such Conduit Purchaser of
Commercial Paper, including, without limitation, a Liquidity Provider Agreement.
"Program Support Provider" shall mean the Person or Persons who
will provide program support to a Conduit Purchaser pursuant to a Program
Support Agreement, including, without limitation, a Liquidity Provider.
"Purchase Date" shall mean each date on which the Purchasers
purchase Mortgage Loans from the Seller pursuant to Section 2.01.
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"Purchase Date Notice" shall have the meaning specified in
Section 2.01(c) hereof.
"Purchase Price" shall mean, for each Mortgage Loan purchased on
any Purchase Date, an amount equal to the lesser of (a) the Anticipated Takeout
Amount for the Takeout Commitment relating to such Mortgage Loan, minus the
expected Completion Fee applicable to such Mortgage Loan based on the
Anticipated Takeout Amount and (b) the unpaid principal balance of the Mortgage
Loan.
"Purchaser Group" shall mean each group of Purchasers consisting
of a Conduit Purchaser, the Related Committed Purchasers, the related Liquidity
Providers and Program Support Providers, if any, the Related Funding Agent and
their respective assigns and participants.
"Purchaser Group Limit" shall mean, with respect to any Purchaser
Group, the amount set forth opposite such Purchaser Group's Conduit Purchaser's
name on Schedule A, or as identified in the Assignment and Assumption Agreement
or Joinder Agreement pursuant to which the members of such Purchaser Group
became a party hereto, as the same may be reduced from time to time pursuant to
the terms hereof.
"Purchaser" shall mean a Conduit Purchaser and/or a Committed
Purchaser, as the context requires.
"Related Committed Purchaser" shall mean, with respect to any
Conduit Purchaser, each Committed Purchaser set forth opposite such Conduit
Purchaser's name on Schedule A, or the entity specified as such in the
Assignment and Assumption Agreement or Joinder Agreement pursuant to which such
entities became party hereto, and their respective permitted successors and
assigns.
"Related Funding Agent" shall mean, with respect to any Conduit
Purchaser, the Funding Agent set forth opposite such Conduit Purchaser's name on
Schedule A, or with respect to any Conduit Purchaser not listed on Schedule A,
the entity specified as a Funding Agent in the Assignment and Assumption
Agreement or Joinder Agreement pursuant which such Conduit Purchaser became
party hereto, and their respective permitted successors and assigns.
"Remittance Date" shall mean the tenth (10th) day of each month,
or if such day is not a Business Day, the immediately succeeding Business Day.
"Reportable Event" shall have the meaning set forth in Section
4043(c) of ERISA (other than a Reportable Event as to which the provision of 30
days notice to the PBGC is waived under applicable regulations, provided, that a
failure to meet the minimum funding standard of Section 412 of the Code and of
Section 302 of ERISA shall be a Reportable Event regardless of the issuance of
any such waiver), or shall mean the occurrence of any of the events described in
Section 4063(a) or 4069(a) of ERISA.
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"Required Funding Agents" shall mean the Funding Agents for the
Purchaser Groups having aggregate Purchaser Group Limits in excess of fifty
percent (50%) of the Maximum Purchase Limit.
"Requirement of Law" as to any Person shall mean the articles of
incorporation, by-laws, certificate of formation and limited liability company
agreement or other organizational or governing documents of such Person, and any
law, statute, code, ordinance, order, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or other
determination, direction or requirement (including, without limitation, any of
the foregoing that relate to energy regulations and occupational, safety and
health standards or controls and any hazardous materials laws) of any
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Reuters Screen LIBO Page" shall mean the display designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or such other page as
may replace the LIBO page on that service for the purposes of displaying London
interbank offered rates of major banks).
"Sale Agreement" shall mean the agreement and any other
correspondent agreements providing for the purchase by an Approved Takeout
Investor of Mortgage Loans from the Seller.
"Second Lien Loan" shall mean a Mortgage Loan that (i) is secured
by a second priority Mortgage on residential real property, (ii) has a
demonstrated secondary market and is readily securitizable, and (iii) matches
all applicable requirements for purchase under the requirements of a Takeout
Commitment specifically issued for the purchase of such Mortgage Loan.
"Section 7.02 Costs" has the meaning given to such term in
Section 7.02.
"Seller" shall mean AHM.
"Servicer" shall mean initially AHMS, and thereafter any Person
appointed as Successor Servicer pursuant to the terms of this Agreement.
"Servicer Termination Event" shall have the meaning specified in
Section 4.02.
"Servicing Fee" shall mean a fee payable to the Servicer in the
amount set forth in Sections 5.04 and 5.05.
"Servicing Officer" shall mean any representative of the Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name appears on a list of servicing officers (or as may be
designated by such Person) furnished to the Administrative Agent by the
Servicer, as such list may from time to time be amended.
"Settlement Date" shall mean, with respect to each Mortgage Loan,
the date on which payment for such Mortgage Loan is received by the
Administrative Agent on behalf of the
24
Purchasers from an Approved Takeout Investor pursuant to the applicable Takeout
Commitment or from any other Person if such Mortgage Loan is a Fall-Out Loan.
"SG" shall have the meaning set forth in the preamble hereto.
"Standard & Poor's" shall mean Standard and Poor's Ratings
Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and any successor
thereof.
"Subordinated Debt" shall mean the Debt of AHMIC and its
Subsidiaries subordinated to the Credit Agreement Obligations in the manner and
to the extent required by Bank of America, N.A., as administrative agent under
the Credit Agreement, pursuant to written subordination agreements satisfactory
in form and substance to Bank of America, N.A., as administrative agent under
the Credit Agreement.
"Subsidiary" shall mean, with respect to any Person, any
corporation or other entity of which securities having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person, or one or
more of its Subsidiaries, or by such Person and one or more of its Subsidiaries.
"Successor Servicer" shall have the meaning specified in Section
4.02.
"Super Jumbo Loan" shall mean a Jumbo Loan having an original
principal balance in excess of $999,999 but not more than $3,000,000.
"Takeout Amount" shall mean, with respect to each Mortgage Loan,
the principal proceeds paid by the Approved Takeout Investor in connection with
the related Takeout Commitment for such Mortgage Loan.
"Takeout Commitment" shall mean a fully executed commitment from
an Approved Takeout Investor to the Seller, with respect to such Approved
Takeout Investor's commitment related to specific Mortgage Loans, confirming the
details of a forward trade between such Approved Takeout Investor and the Seller
with respect to such Mortgage Loans, which commitment shall be enforceable and
in full force and effect, and shall be validly and effectively assigned to the
Administrative Agent, on behalf of the Purchasers, pursuant to a Trade
Assignment.
"Takeout Confirmation" shall mean the written notification to the
Seller from the related Approved Takeout Investor containing all of the relevant
details of the Takeout Commitment, which notification may take the form of a
trade confirmation.
"Takeout Deficiency Fee" shall mean with respect to each Mortgage
Loan which is subject to a Takeout Failure, a fee in the amount equal to (i) the
Anticipated Takeout Amount for such Mortgage Loan minus (ii) any amounts
actually received by the Administrative Agent upon the sale of such Mortgage
Loan to an Approved Takeout Investor or any other Person (which amount in this
clause (ii) shall be deemed to be zero for any Mortgage Loan which is not sold
within 180 days after it is purchased hereunder by the Administrative Agent, on
behalf of
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the Purchasers), which fee is payable by the Seller to the Administrative Agent,
on behalf of the Purchasers, pursuant to the terms hereof.
"Takeout Failure" shall mean the failure of a Mortgage Loan to be
purchased by the related Approved Takeout Investor for any reason whatsoever on
the Anticipated Settlement Date and at the Anticipated Takeout Amount for such
Mortgage Loan.
"Tangible Net Worth" shall mean, with respect to any Person, the
excess of total assets of such Person over the total liabilities of such Person
determined in accordance with GAAP, but excluding from the determination of
total assets: (a) all assets which would be classified as intangible assets
under GAAP, including, without limitation, goodwill (whether representing the
excess cost over book value of assets acquired or otherwise), patents,
trademarks, trade names, copyrights, franchises and deferred charges (including,
without limitation, unamortized debt discount and expense, organization costs
and research and product development costs), (b) loans or other extensions of
credit to officers, employees, shareholders or Affiliates of such Person (other
than the Servicer, the Sellers, the Performance Guarantors and American Home
Mortgage Acceptance, Inc.) and (c) investments in Subsidiaries of such Person
(other than the Servicer, the Sellers, the Performance Guarantors and American
Home Mortgage Acceptance, Inc.).
"Taxes" has the meaning given to such term in Section 7.03(a).
"Telerate Page 3750" shall mean page 3750 of the Bridge Telerate
Market Report screen.
"Termination Date" shall mean the earliest of (i) that Business
Day which the Seller designates as the Termination Date by written notice to the
Purchasers at least thirty (30) days prior to such date, (ii) the date of
declaration or automatic occurrence of the Termination Date pursuant to Section
8.01, and (iii) October 15, 2007, or such later date to which the Termination
Date may be extended in accordance with Section 2.08.
"Termination Event" shall have the meaning specified in Section
8.01.
"Trade Assignment" shall mean a letter substantially in the form
of Exhibit F.
"Trust Receipt" shall mean the trust receipts issued by the
Custodian evidencing the Mortgage Loans it holds, in the forms attached as
Exhibits F and F-1 to the Custodial Agreement.
"UCC" shall mean the Uniform Commercial Code, as amended from
time to time, as in effect in the relevant jurisdiction.
"Underwriting Guidelines" shall mean the Seller's Underwriting
Guidelines, a copy of which has been provided to the Administrative Agent.
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"Unused Fee" shall mean the "Unused Fee" payable to each Funding
Agent, on behalf of the applicable Conduit Purchaser(s), on each Remittance Date
as set forth in the Fee Letter.
"VA" shall mean the Department of Veterans Affairs, or any
successor thereto.
"VA Loan" shall mean a Mortgage Loan, the payment of which is
partially or completely guaranteed by the VA under the Servicemen's Readjustment
Act of 1944, as amended, or Chapter 37 of Title 38 of the United States Code or
with respect to which there is a current binding and enforceable commitment for
such a guaranty issued by the VA.
"Wet Loan" shall mean a wet-funded Mortgage Loan for which, as of
the related Purchase Date, the Custodial File is incomplete and which shall have
the following additional characteristics:
(i) the proceeds thereof have been funded by the Seller,
or the transferor of such Mortgage Loan to the Seller, prior to
such Purchase Date;
(ii) the proceeds thereof have not been returned to the
Seller, or the transferor of such Mortgage Loan to the Seller, by
the escrow or closing agent for such Wet Loan; and
(iii) upon recordation of the related Mortgage, such
Mortgage Loan will constitute a first lien or second lien on the
premises described therein.
"Yield" shall mean for each Purchaser Group for each portion of
the Net Investment related to a Mortgage Loan and the applicable Interest Period
an amount equal to the product of (i) such Purchaser Group's Pro Rata Share of
such portion of the Net Investment, (ii) the Applicable Rate for such Purchaser
Group for such Interest Period and (iii) a fraction, having as its numerator,
the number of days in such Interest Period and, as its denominator, 360.
SECTION 1.02. Other Definitional Provisions.
(a) All terms defined in this Agreement shall, unless
specifically provided to the contrary, have the defined meanings when used in
any Principal Agreement, certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(b) As used herein and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in Section
1.01, and accounting terms partly defined in Section 1.01 to the extent not
defined, shall have the respective meanings given to them under generally
accepted accounting principles, as applicable, as in effect on the date hereof.
To the extent that the definitions of accounting terms herein are inconsistent
with the meanings of such terms under generally accepted accounting principles
or regulatory accounting principles, the definitions contained herein shall
control.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular
27
provision of this Agreement; and Section, Schedule and Exhibit references
contained in this Agreement are references to Sections, Schedules and Exhibits
in or to this Agreement unless otherwise specified.
(d) Reference to any agreement shall mean such agreement as it is
amended, restated, supplemented or otherwise modified from time to time.
(e) Reference to any party shall mean that party, its successors
and assigns permitted by the terms of this Agreement.
ARTICLE II
THE MORTGAGE LOAN PURCHASE FACILITY
SECTION 2.01. Procedures for Purchases of Mortgage Loans.
(a) On each Purchase Date, subject to terms and conditions set
forth in this Agreement, and in reliance on the covenants, representations and
agreements set forth herein, the Seller may offer to sell Mortgage Loans to the
Purchasers, up to the Maximum Purchase Limit, and each Conduit Purchaser, acting
through its Funding Agent, may, in its discretion, and each Committed Purchaser,
acting through its Funding Agent, shall, if the related Conduit Purchaser
determines not to so purchase, purchase such Mortgage Loans. Without limiting
any other provision of this Agreement, the obligation of any Purchaser to
purchase Mortgage Loans on the applicable Purchase Date is subject to the
satisfaction of the conditions precedent set forth in Section 3.02 hereof.
(b) Not later than 1:00 p.m. (New York time) on the Business Day
preceding the applicable Purchase Date, the Seller shall deliver (by telecopy or
other electronic means) to each Funding Agent and the Administrative Agent a
written notice, substantially in the form attached hereto as Exhibit D (an
"Initial Purchase Date Notice"), specifying among other things, the requested
Purchase Date and the aggregate Purchase Price payable for the Mortgage Loans to
be purchased on such Purchase Date (which Purchase Price shall be equal to at
least $10,000,000 in the aggregate).
(c) On or before 12:00 noon (New York time) on each Purchase
Date, the Servicer shall deliver to the Administrative Agent the following items
on such Purchase Date:
(i) a written notice, substantially in the form attached
hereto as Exhibit G (a "Purchase Date Notice");
(ii) an executed Trade Assignment for each Takeout
Commitment relating to each Mortgage Loan, together with a copy
of each related Takeout Confirmation; and
(iii) the cumulative Trust Receipt covering all Mortgage
Loans purchased hereunder and then held by the Custodian
(including the Mortgage Loans being purchased, but excluding all
Wet Mortgage Loans, fully completed and authenticated by the
Custodian and an acknowledgment by the Custodian of the
28
Wet Loans for which a Trust Receipt will be delivered within 10
days after such Purchase Date.
(d) On each Purchase Date prior to the Termination Date, each
Conduit Purchaser, through its respective Funding Agent, may (but is not
committed to), at the request of the Seller pursuant to a Purchase Date Notice,
fund its Purchaser Group's Pro Rata Share of the applicable Purchase Price. If
any Conduit Purchaser chooses at any time not to fund its Purchaser Group's Pro
Rata Share of a Purchase Price when requested by the Seller, the related
Committed Purchasers, through its respective Funding Agent, shall, subject to
the provisions of Section 3.02 hereof, fund such Purchaser Group's Pro Rata
Share of such Purchase Price. Each Purchaser shall remit such payment to the
Seller no later than 12:00 noon (New York time) at the account specified in the
Purchase Date Notice in immediately available funds. On each Purchase Date, the
Net Investment shall automatically increase by the amount of the Purchase Price
funded by the applicable Purchasers on such Purchase Date and each Purchaser's
funding of its portion of such Purchase Price shall represent an increase in the
related Purchaser Group's respective Pro Rata Share of the outstanding Net
Investment. Each Funding Agent shall provide prompt notice to the Seller if the
related Conduit Purchaser elects not to fund a Purchase Price.
(e) Under no circumstances shall (i) the Purchasers fund any
Purchase Price to the extent that, after giving effect to such funding, the Net
Investment would exceed the Maximum Purchase Limit or (ii) any Purchaser fund
any portion of its Purchaser Group's Pro Rata Share of the Purchase Price to the
extent that, after giving effect to such funding, the related Purchaser Group's
Pro Rata Share of the Net Investment would exceed its Purchaser Group Limit.
SECTION 2.02. Title to Mortgage Loans; Intent of Parties.
(a) The sale by the Seller and the purchase of Mortgage Loans by
the Administrative Agent, for the benefit of the Purchasers, shall constitute a
transfer, assignment, and conveyance by the Seller to the Administrative Agent,
for the benefit of the Purchasers, without recourse (other than as expressly
provided for in this Agreement), of all right, title and interest of the Seller
(excluding any obligations of the Seller thereunder) in, to and under (i) each
Mortgage Loan (including the Mortgage Note evidencing such Mortgage Loan and the
other Principal Mortgage Documents) and any and all moneys of whatsoever nature
payable (upon the occurrence of any event) with respect to each such Mortgage
Loan subject to the terms of this Agreement, (ii) all rights, powers and
remedies of the Seller under or in connection with each such Mortgage Loan
(including the Mortgage Note evidencing such Mortgage Loan and the other
Principal Mortgage Documents), whether arising under the terms of such Mortgage
Loan, by statute, at law or in equity, or otherwise arising out of any default
by the Mortgagor under such Mortgage Loan, including (without limitation) all
rights to give or receive any notice, consent, approval or waiver thereunder,
(iii) the Mortgages, the Principal Mortgage Documents and all other items of the
Document Files relating to such Mortgage Loans and the contents thereof, (iv)
all security interests and liens securing repayment of such Mortgage Loans, (v)
all documents of title, books and records concerning the foregoing property
(including, without limitation, all data from computer programs, tapes, disks
and related items containing any such information), (vi) the title insurance
policies obtained in connection with such Mortgage Loans, and all insurance
policies, if any, supporting repayment of such Mortgage Loans; (vii) all
29
Mortgaged Property related to such Mortgage Loans, (viii) all guarantees,
supporting obligations and collateral, if any, received with respect to, or
supporting repayment of, such Mortgage Loans; and (ix) to the extent that the
same then or thereafter exist, all proceeds, products, rents and profits of the
foregoing of any nature whatsoever, including (without limitation) all proceeds
of the sale, and proceeds of the conversion, voluntary or involuntary, of any
proceeds thereof (the items described in clauses (i) through (ix) above, the
"Mortgage Loan Assets"). The foregoing transfer, sale, assignment and conveyance
shall not constitute and is not intended to result in the creation, or an
assumption by the Administrative Agent, any Funding Agent or any Purchaser, of
any obligation of the Seller or any other Person in connection with the Mortgage
Loans or under any agreement or instrument relating thereto, including any
obligation to any obligor or guarantor under the Mortgage Loans.
(b) From and after the Purchase Date for the Mortgage Loans, and
subject to the remedies of the Purchasers hereunder, the Seller shall remain the
last named payee or endorsee of each Mortgage Note and the mortgagee or assignee
of record of each Mortgage, in trust for the benefit of the Purchasers, for the
sole purpose of facilitating the servicing of such Mortgage Loan. Following the
occurrence of a Takeout Failure and the continuance thereof unremedied for
fifteen (15) days, the Administrative Agent may, and shall at the request of the
Required Funding Agents, require that the Seller execute assignments of
mortgages in blank or such documents and instruments necessary such that the
Administrative Agent is named as payee or endorsee of each Mortgage Note and the
mortgagee or assignee of record of each Mortgage relating to such Mortgage
Loans. Notwithstanding anything to the contrary contained herein, the
Administrative Agent, the Funding Agents and the Purchasers agree to use their
best efforts to avoid holding an ownership interest in a Mortgage Loan hereunder
for more than one year or such other period permitted by each Applicable Agency
for a holder of mortgage loans which is not an "approved mortgagee" under
applicable Agency Guidelines.
(c) The Seller shall maintain a complete set of books and records
for each Mortgage Loan which shall be clearly marked electronically to reflect
the ownership interest of the Administrative Agent, for the benefit of the
Purchasers, in each Mortgage Loan.
(d) The Purchasers and the Seller confirm that the transactions
contemplated herein are intended to be sales of the Mortgage Loans by the Seller
to the Administrative Agent, for the benefit of the Purchasers, rather than
borrowings secured by the related Mortgage Loans. In the event, for any reason,
any transaction is construed by any court or regulatory authority as a borrowing
rather than as a sale, the Seller and the Purchasers intend that the
Administrative Agent or its assignee, as the case may be, shall have, and hereby
has, a perfected first priority security interest in all of Seller's now
existing or hereafter acquired or arising right, title and interest in and to
(i) the Mortgage Loan Assets, (ii) the Takeout Amounts, (iii) the Takeout
Commitments, (iv) the Collection Account and all investments, securities
entitlements, financial assets and investment property contained therein, and
all certificates and instruments evidencing the same and (v) the proceeds of any
and all of the foregoing (collectively, the "Collateral"), free and clear of
adverse claims. In such case, the Seller shall be deemed to have hereby granted
to the Administrative Agent or its assignee, as the case may be, and hereby has
granted, a first priority security interest in and lien upon the Collateral,
free and clear of adverse claims. In such event, (i) this Agreement shall
constitute a security agreement, and the Administrative Agent or
30
each such assignee shall have all of the rights of a secured party under
applicable law and (ii) each of the Seller and each Purchaser represents and
warrants as to itself that each remittance of amounts by the Seller to the
Purchasers under this Agreement will have been (x) in payment of a debt incurred
by the Seller in the ordinary course of business or financial affairs of Seller
and such Purchaser and (y) made in the ordinary course of business or financial
affairs of the Seller and such Purchaser.
SECTION 2.03. Takeout Commitments. The Seller hereby assigns to
the Administrative Agent, for the benefit of the Purchasers, free of any
security interest, lien, claim or encumbrance of any kind, the Seller's rights
under each Takeout Commitment and to receive the Takeout Amount therefor from
the related Approved Takeout Investor. Subject to the Purchasers' rights
hereunder, unless otherwise directed by the Administrative Agent, the Seller
agrees that it will satisfy the Takeout Commitment on the Settlement Date
specified therein. The Seller understands that, as a result of this Section 2.03
and each Trade Assignment, the Administrative Agent, on behalf of the
Purchasers, will succeed to the rights of the Seller with respect to each
Takeout Commitment subject to a Trade Assignment and the obligation of the
Seller to deliver the applicable Mortgage Loans against the receipt by the
Administrative Agent of an amount equal to the Anticipated Takeout Amount
therefor, and that in directing the Seller to deliver the applicable Mortgage
Loans to the applicable Approved Takeout Investor under each such Takeout
Commitment, the Administrative Agent will stand in the place and stead of the
Seller as provided in the applicable Trade Assignment and, consequently, will be
acting as a non-dealer in exercising its rights and fulfilling its obligations
assigned pursuant to this Section 2.03 and each Trade Assignment.
Notwithstanding the assignments hereunder, other than the obligation of the
Seller to deliver the applicable Mortgage Loans against the receipt by the
Administrative Agent of an amount equal to the Anticipated Takeout Amount
therefor, none of the Administrative Agent, any Funding Agent or any Purchaser
is receiving or assuming any obligation of the Seller under any Sale Agreement,
Takeout Commitment, or Takeout Assignment.
SECTION 2.04. Sales of Mortgage Loans to Approved Takeout
Investors.
(a) On each Settlement Date, the Administrative Agent may, at its
option, either (i) instruct the Custodian to deliver to the applicable Approved
Takeout Investor, in accordance with such Approved Takeout Investor's
instructions, the Custodial File in respect of the Mortgage Loans subject to
such Approved Takeout Investor's Takeout Commitment, in the manner and at the
time set forth in the Custodial Agreement, or (ii) provide for the delivery of
the Custodial File through an escrow arrangement satisfactory to the
Administrative Agent and such Approved Takeout Investor. The Seller shall, not
later than two (2) Business Days prior to the related Anticipated Settlement
Date or such other time as may be agreed upon by the Seller and the Approved
Takeout Investor to meet the Anticipated Settlement Date, deliver to the
applicable Approved Takeout Investor the related Credit File (if required by the
Approved Takeout Investor) and thereafter any and all additional documents
reasonably requested by such Approved Takeout Investor to enable it to purchase
such Mortgage Loans on or before such Anticipated Settlement Date.
31
(b) The Completion Fee shall be paid in accordance with Sections
5.03, 5.04 and 5.05, and in any event the Completion Fee relating to any
Mortgage Loan shall not be payable to the Seller (i) until the date of receipt
by the Administrative Agent of the related Anticipated Takeout Amount with
respect to such Mortgage Loan and (ii) if there are not sufficient funds to pay
such Completion Fee pursuant to the application of Collections as set forth in
Sections 5.03, 5.04 or 5.05.
(c) If (i) any Mortgage Loan is a Defective Mortgage Loan
pursuant to clause (a) of the definition thereof at the time of the delivery of
the related Trust Receipt to the Administrative Agent and in the Administrative
Agent's sole judgment the defects in such Mortgage Loan will not be cured (or in
fact are not cured) by the Seller as of the Cure Date, or (ii) if any Mortgage
Loan is a Defective Mortgage Loan pursuant to clause (b) of the definition
thereof, or (iii) the first Monthly Payment due on any Mortgage Loan following
the related Purchase Date is not made within 30 days of its due date, the
Required Funding Agents may require that the Seller, upon receipt of notice from
the Required Funding Agents of their exercise of such right, either (x)
repurchase the Administrative Agent's ownership interest in such Mortgage Loan
by remitting to the Funding Agents within one (1) Business Day thereafter the
amount paid by the Purchasers for such Mortgage Loan plus interest at the
Applicable Rate on the principal amount thereof from the date of the
Administrative Agent's purchase of the related Mortgage Loan to the date of such
repurchase or (y) deliver to the Custodian a Mortgage Loan in exchange for such
Mortgage Loan, which newly delivered Mortgage Loan shall be an Eligible Mortgage
Loan. If the aggregate principal balance of all Mortgage Loan(s) that are
delivered pursuant to clause (y) of the immediately preceding sentence is less
than the aggregate principal balance of all Mortgage Loans that are being
replaced by such Mortgage Loans, the Seller shall remit with such Mortgage Loan
to the Funding Agents an amount equal to the difference between the aggregate
principal balance of the new Mortgage Loans delivered and the aggregate
principal balance of the Mortgage Loans being replaced thereby.
(d) Each Mortgage Loan delivered to the Administrative Agent
hereunder shall be delivered on a servicing released basis free of any servicing
rights in favor of the Seller or the Servicer and free of any interest, lien,
encumbrance or claim of any kind of the Seller. The Seller hereby waives its
right to assert any interest, lien, encumbrance or claim of any kind on each
such Mortgage Loan. Upon transfer of such servicing rights to any Successor
Servicer, the Seller shall deliver or cause to be delivered all files and
documents relating to each Mortgage Loan held by the Seller to the Successor
Servicer. The Seller shall promptly take such actions and furnish to the
Administrative Agent such documents that the Administrative Agent deems
reasonably necessary or reasonably appropriate to enable it to cure any defect
in each such Mortgage Loan or to enforce such Mortgage Loans, as appropriate.
(e) In the event that a Mortgage Loan is not purchased by an
Approved Takeout Investor on or before the Cure Date, upon not less than five
(5) days notice from the Administrative Agent to the Seller, the Seller shall
use commercially reasonable efforts to obtain a Takeout Commitment from another
Approved Takeout Investor to purchase such Mortgage Loan as soon as possible. In
the event that a Mortgage Loan is not purchased by an Approved Takeout Investor
on or before the 30th day after the Anticipated Settlement Date, the
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Administrative Agent may, but shall not be obligated to, arrange for the sale of
such Mortgage Loan as soon as possible.
(f) In addition to any rights and remedies of the Administrative
Agent, the Funding Agents and the Purchasers provided by this Agreement and by
law, the Administrative Agent, the Funding Agents and the Purchasers shall have
the right, without prior notice to the Seller, any such notice being expressly
waived by the Seller to the extent permitted by applicable law, upon any amount
becoming due and payable by the Seller hereunder to set-off and appropriate and
apply against such amount any and all property and deposits (general or special,
time or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, or matured, at any time held or owing by the
Administrative Agent, any Funding Agent, any Purchaser or any Affiliate thereof
to or for the credit or the account of the Seller (including, without
limitation, the amount of any accrued and unpaid Completion Fees). The
Administrative Agent, any Funding Agent and any Purchaser may also set-off cash
and all other sums or obligations owed by such Person or its Affiliates to the
Seller (whether under this Agreement or under any other agreement between the
parties or between the Seller and any Affiliate of the Administrative Agent, any
Funding Agent or any Purchaser) against all of the Seller's obligations to such
Person or its Affiliates (whether under this Agreement or under any other
agreement between the parties or between the Sellers and any Affiliate of such
Person). The exercise of any such right of set-off shall be without prejudice to
the Administrative Agent's, any Funding Agent's, any Purchaser's or its
Affiliate's right to recover any deficiency.
(g) The Seller agrees that, with respect to any Mortgage Loan
purchased by the Administrative Agent, the related Takeout Commitment shall have
an expiration date which is not later than 60 calendar days after the related
Purchase Date. The Seller further agrees that any additional Takeout Commitment
that it obtains with respect to such Mortgage Loan if the initial Takeout
Investor does not perform under such Takeout Commitment shall have an expiration
date which is not later than 75 calendar days after the related Purchase Date.
(h) The Seller shall notify and provide the Funding Agents with
copies of any material changes made to any Sale Agreement between the Seller and
any Approved Takeout Investor within two (2) Business Days after such change.
SECTION 2.05. Takeout Deficiency Fee. In the event that any
Takeout Failure occurs with respect to any Mortgage Loan, then at any time on or
after the earlier of (i) the date such Mortgage Loan is sold and (ii) 180 days
after the Purchase Date for such Mortgage Loan, the Administrative Agent may
demand, and the Seller shall pay to the Administrative Agent, on behalf of the
Purchasers, within one (1) Business Day after such demand, all or a portion of
the Takeout Deficiency Fee for such Mortgage Loan; provided, however, that with
respect to each Mortgage Pool, no Takeout Deficiency Fee shall be paid if after
giving effect to such payment, the sum of (i) the aggregate Takeout Deficiency
Fees paid with respect to the Mortgage Loans in such Mortgage Pool as of such
date and (ii) the aggregate Completion Fees for Mortgage Loans in such Mortgage
Pool which have not been paid to the Seller as of such date shall exceed 5% of
the aggregate Purchase Price for the Mortgage Loans included in such Mortgage
Pool. Any Takeout Deficiency Fee received by the Administrative Agent shall be
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applied to the unpaid Net Investment and accrued Yield with respect to such
Mortgage Loan and all other amounts due to the Purchasers and the Funding Agents
and distributed on a pro rata basis among the Purchaser Groups.
SECTION 2.06. Reductions and Increases to the Maximum Purchase
Limit.
(a) The Seller may, from time to time upon at least sixty (60)
days' prior written notice to the Administrative Agent, elect to reduce the
Maximum Purchase Limit, provided, that, after giving effect to any such
reduction the outstanding Net Investment shall not exceed the Maximum Purchase
Limit. Promptly following its receipt of any such notice, the Administrative
Agent shall deliver written notice to each Funding Agent of such reduction. Any
such reduction shall be permanent and shall reduce each Purchaser Group Limit
hereunder ratably in accordance with the respective Purchaser Group's Pro Rata
Share of such reduction to the Maximum Purchase Limit.
(b) The Seller may, from time to time upon at least fifteen (15)
days' prior written notice to the Administrative Agent, request an increase to
the Maximum Purchase Limit; provided, however, that unless otherwise agreed to
by the Funding Agents or an existing Purchaser Group or Purchaser Groups agrees
to increase its Purchaser Group Limit by an amount equal to the requested
increase to the Maximum Purchase Limit, the Seller shall obtain one or more
additional Purchaser Groups with aggregate Purchaser Group Limits equal to the
requested increase to the Maximum Purchase Limit. Each such notice shall be
substantially in the form of Exhibit H hereto (each a "Maximum Purchase Limit
Increase Notice") and shall specify (i) the proposed date such increase shall
become effective, (ii) the proposed amount of such increase (which amount, to
the extent the Seller has requested the existing Purchaser Groups to increase
their respective Pro Rata Share of the Maximum Purchase Limit, shall be at least
$25,000,000 per Purchaser Group), and (iii) the members of the additional
Purchaser Group, if any. Such increase to the Maximum Purchase Limit shall
become effective, if, and only if, (i) the Administrative Agent has approved
such increase (such approval not to be unreasonably withheld), by executing such
Maximum Purchase Limit Increase Notice and (ii) (A) to the extent all of the
Purchaser Groups have not agreed to such increase in the Maximum Purchase Limit,
the related Purchasers and Related Funding Agent of one or more of the Purchaser
Groups have, in their sole discretion, agreed to increase its related Purchaser
Group Limit in an amount equal to the requested increase to the Maximum Purchase
Limit or (B) to the extent that the related Purchasers and Related Funding Agent
of one or more of the Purchaser Groups have, in their sole discretion, agreed to
increase the Maximum Purchase Limit or its related Purchaser Group Limit in an
amount which is less than the Seller's requested increase to the Maximum
Purchase Limit, the Seller has reduced its requested increase to the Maximum
Purchase Limit to an amount equal to such lower amount or (C) the Seller has
obtained one or more additional Purchaser Groups with aggregate Purchaser Group
Limits (each of which shall be a minimum amount of $100,000,000) equal to the
requested increase to the Maximum Purchase Limit. To the extent additional
Purchaser Groups are not obtained by the Seller with respect to such increase to
the Maximum Purchase Limit, such increase shall increase each Purchaser Group
Limit hereunder ratably in accordance with the respective Purchaser Group's Pro
Rata Share of such increase to the Maximum Purchase Limit; provided, however,
that if any Purchaser Group elects not to increase its Pro Rata Share of the
Maximum Purchase Limit, one or more of the
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remaining Purchaser Group(s) can elect to so increase its share of the Maximum
Purchase Limit. Nothing contained herein shall constitute a commitment on the
part of any Purchaser hereunder to agree to any such increase.
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SECTION 2.07. Sharing Payments. If any Purchaser (for purposes of
this Section only, a "Recipient") shall obtain any payment or other recovery
(whether voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) on account of its share of the Net Investment (other than pursuant to
Article V hereof) in excess of its ratable share of payments to which such
Purchaser is entitled hereunder, such Recipient shall forthwith purchase from
the other Purchasers entitled to a share of such excess payment or recovery
participations in such Recipient's interest in its share of the Net Investment
as shall be necessary to cause such Recipient to share in such excess payment or
recovery ratably with each other Person entitled thereto; provided, however,
that if all or any portion of such excess payment or recovery is thereafter
recovered from such Recipient, such purchase from each such other Person shall
be rescinded and each such other Person shall repay to the Recipient the
purchase price paid by such Recipient for such participation to the extent of
such recovery, together with an amount equal to such other Person's ratable
share (according to the proportion of (a) the amount of such other Person's
required payment to (b) the total amount so recovered from the Recipient) of any
interest or other amount paid or payable by the Recipient in respect of the
total amount so recovered.
SECTION 2.08. Extension of Term. The Seller may, at any time
during the period which is no more than sixty (60) days or less than thirty (30)
days immediately preceding the date set forth in clause (iii) of the definition
of Termination Date (as such date may have previously been extended pursuant to
this Section 2.08), request that the then applicable date set forth in clause
(iii) of the definition of Termination Date be extended for an additional 364
days. Any such request shall be in writing and delivered to the Administrative
Agent, and shall be subject to the following conditions: (a) at no time will
this Agreement have a remaining term of more than 364 days and, if any such
request would result in a remaining term of more than 364 days, such request
shall be deemed to have been made for such number of days so that, after giving
effect to such extension on the date requested, such remaining term will not
exceed 364 days, (b) neither the Administrative Agent nor any Purchaser shall
have any obligation to extend the Termination Date at any time, and (c) any such
extension shall be effective only upon the written agreement of the
Administrative Agent, each Funding Agent, each Purchaser, the Seller and the
Servicer; provided, however, that the Termination Date shall not occur as a
result of a Purchaser Group's failure to agree to any such extension if, on or
prior to such date, either (1) such Purchaser Group is replaced by another
Purchaser Group which has a Purchaser Group Limit equal to that of such
nonrenewing Purchaser Group (the "Nonrenewing Amount") or (2) the Maximum
Purchase Limit shall have been reduced by an amount equal to the Nonrenewing
Amount and the outstanding Net Investment as of such date is not greater than
the Maximum Purchase Limit as so reduced (after giving effect to any decreases
in the Net Investment pursuant to Article V occurring on such date). The
Administrative Agent will (on behalf of itself, the Purchasers and the Funding
Agents) respond to any such request within thirty (30) days of its receipt of
such request, provided, that a failure by the Administrative Agent to respond
within such 30-day period shall be deemed to be a rejection of the requested
extension.
ARTICLE III
CONDITIONS PRECEDENT
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SECTION 3.01. Conditions Precedent to the Obligations of the
Purchasers. The Purchasers' obligations hereunder shall be subject to the
satisfaction (or waiver by the Administrative Agent and the Funding Agents) on
the date hereof of each of the following conditions precedent:
(a) On or before the date hereof, the Seller shall deliver or
cause to be delivered the following documents to the Administrative Agent:
(i) An Officer's Certificate of the Seller, the Servicer
and each Performance Guarantor, including, without limitation,
identification of the Servicing Officers;
(ii) Certificate of the Secretary or Assistant Secretary
of each of the Seller, the Servicer, and each Performance
Guarantor certifying the resolutions adopted by its Board of
Directors approving the execution, delivery and performance of
this Agreement and each of the other Principal Agreements to
which it is a party and the transactions contemplated hereunder
and thereunder (copies attached thereto), the incumbency and
signatures of the officers of such entity authorized to sign this
Agreement and each of the other Principal Agreements to which it
is a party, and the certificate of incorporation and bylaws of
such entity on the date of such certification (copies attached
thereto);
(iii) A certificate of the Secretary of State of the
jurisdiction of organization of each of the Seller, the Servicer
and each Performance Guarantor, certifying the due incorporation,
good standing and authority to conduct business, dated not more
than thirty (30) days prior to the date hereof;
(iv) A duly executed copy of this Agreement, the Custodial
Agreement, the Collection Account Control Agreement, the
Electronic Tracking Agreement, the Performance Guaranty and any
documents executed by it in connection therewith;
(v) Executed copies of the Fee Letter and the Agent Fee
Letter;
(vi) UCC financing statements with respect to the assets
purchased hereunder in such manner and form and in such
jurisdictions as will meet the requirements of applicable state
law in order to perfect the Administrative Agent's security
interest, on behalf of the Purchasers, in such assets;
(vii) Opinions of Counsel for the Seller, the Servicer and
each Performance Guarantor with respect to corporate matters,
enforceability, true sale and perfection of security interest;
(viii) If required with respect to a Conduit Purchaser, a
letter to such Conduit Purchaser from each rating agency rating
the Commercial Paper of such Conduit Purchaser confirming that
such Conduit Purchaser's participation in the transaction
contemplated by this Agreement will not result in the downgrade
or withdrawal of its Commercial Paper rating; and
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(ix) Such other documents, Opinions of Counsel and
certificates as the Administrative Agent or any Funding Agent may
reasonably request.
(b) On or before the date hereof, Seller shall have paid to the
extent due all reasonable fees and out-of-pocket costs and expenses (including,
without limitation, reasonable legal fees and expenses) required to be paid
hereunder and under the Principal Agreements, including amounts due under each
of the Fee Letter and the Agent Fee Letter.
SECTION 3.02. Conditions Precedent to Purchases. The Purchasers'
obligation to fund the Purchase Price of any purchases of Mortgage Loans on any
Purchase Date (including the initial Purchase Date) and the right of the Seller
to sell one or more Mortgage Loans on any Purchase Date shall be subject to the
satisfaction (or waiver by the Funding Agents) of each of the conditions set
forth in Section 3.01 and the following conditions precedent:
(a) With respect to each Purchase Date, the Seller shall have
delivered to the Administrative Agent each of the items required under Sections
2.01(b) and (c).
(b) With respect to each Purchase Date, the Custodian shall have
delivered to the Administrative Agent a Trust Receipt certifying that (A) on the
applicable date of purchase, the Custodial Files with respect to each Mortgage
Loan are in its custody, and, as of the applicable date, are being held by such
Custodian for the benefit of the Purchasers and (B) with respect to Wet Loans,
that the Custodian has received the related Purchase Date Notice.
(c) With respect to each Purchase Date, prior to 11:00 a.m. (New
York time) on such Purchase Date, the Administrative Agent shall have received a
fully executed valid and enforceable Takeout Commitment and Trade Confirmation
from an Approved Takeout Investor and a valid and enforceable Trade Assignment
for each Takeout Commitment with respect to each Mortgage Loan, executed by the
Seller.
(d) After giving effect to the purchase of such Mortgage Loans,
the Concentration Limits will not be exceeded.
(e) After giving effect to the purchase of such Mortgage Loans,
the aggregate outstanding balance of all Mortgage Loans which are Wet Loans and
subject to this Agreement as of such date does not exceed 10% of the Maximum
Purchase Limit as of such date.
(f) After giving effect to the purchase of such Mortgage Loans,
the aggregate outstanding balance of all Mortgage Loans which are FHA Loans or
VA Loans and subject to this Agreement as of such date does not exceed 20% of
the Maximum Purchase Limit as of such date.
(g) After giving effect to the purchase of such Mortgage Loans,
the aggregate outstanding balance of all Mortgage Loans which are Option ARM
Loans and subject to this Agreement as of such date does not exceed 25% of the
Maximum Purchase Limit as of such date.
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(h) After giving effect to the purchase of such Mortgage Loans,
the aggregate outstanding balance of all Mortgage Loans which have a term of
maturity of over 30 years and are subject to this Agreement as of such date does
not exceed 10% of the Maximum Purchase Limit as of such date.
(i) After giving effect to the purchase of such Mortgage Loans,
the aggregate outstanding balance of all Mortgage Loans which are supported by
second lien Mortgages and subject to this Agreement as of such date does not
exceed 15% of the Maximum Purchase Limit as of such date.
(j) After giving effect to the purchase of such Mortgage Loans
and as of such Purchase Date, (i) the aggregate outstanding balance of all
Mortgage Loans subject to this Agreement as of such date and which were
originated more than 90 days prior to such date does not exceed 10% of the
Maximum Purchase Limit as of such date, (ii) the aggregate outstanding balance
of all Mortgage Loans subject to this Agreement as of such date and which have
been subject to this Agreement for more than 60 days does not exceed 10% of the
Maximum Purchase Limit, and (iii) no Mortgage Loan as of such date has been
subject to this Agreement for more than 180 days.
(k) The representations and warranties of the Seller and the
Servicer contained in this Agreement or any Principal Agreement (other than
those representations and warranties that, by their express terms, are limited
to the effective date of the document or agreement in which they are initially
made) shall be true and correct in all material respects on and as of such
Purchase Date.
(l) No Termination Event or Potential Termination Event shall
have occurred and be continuing, or would result from such Purchase (unless such
Termination Event or Potential Termination Event, as applicable, has been waived
in writing by the Funding Agents), and no change or event that constitutes a
Material Adverse Effect shall have occurred and be continuing as of the date of
such Purchase.
(m) This Agreement and each of the other Principal Agreements are
in full force and effect.
(n) Each of the Seller's, the Servicer's and the Performance
Guarantors' representations and warranties in this Agreement and each of the
other Principal Agreements to which it is a party and in any officer's
certificate delivered to the Administrative Agent or Funding Agents in
connection herewith or therewith shall be true and correct in all material
respects on and as of the date hereof and such Purchase Date, with the same
effect as though such representations and warranties had been made on and as of
such date, and the Seller, the Servicer and the Performance Guarantors shall
have complied with all the agreements and satisfied all the conditions under
this Agreement and each of the other Principal Agreements to which it is a party
in all material respects on its part to be performed or satisfied at or prior to
the date hereof or Purchase Date, as applicable (the acceptance of any Purchase
Price shall be deemed to constitute a representation and warranty by the Seller
and the Servicer that the foregoing statements are true).
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(o) No change shall have occurred in any law, rule or regulation
that would prohibit the consummation of any transaction contemplated hereby,
that would impose limits on the amounts that the Purchasers may legally receive
or that would impose a material tax or levy (other than Excluded Taxes or a tax
or levy covered by the indemnity provisions set forth in Sections 7.02 and 7.03
hereof) on the Net Investment or payments received in respect of the Net
Investment.
(p) No action, proceeding or investigation shall have been
instituted or threatened, nor shall any order, judgment or decree have been
issued or proposed to be issued by any court, agency or authority to set aside,
restrain, enjoin or prevent the consummation of any transaction contemplated
hereby or seeking material damages against the Funding Agents, Administrative
Agent or Purchasers in connection with the transactions contemplated by the
Principal Agreements.
(q) The Seller shall have delivered to the Administrative Agent
for filing, all UCC-1 financing statements or other instruments in respect of
the Mortgage Loans and other Collateral related thereto as required by the
Administrative Agent in order to perfect the Administrative Agents' and the
Purchasers' security interest in such Mortgage Loans.
(r) The Seller shall have delivered to the Administrative Agent a
sufficient number of originals such that the Administrative Agent may have an
executed original thereof, of such other documents, certificates and opinions of
counsel, including (i) such other documents as may be necessary to perfect or
maintain the priority of any Lien granted or intended to be granted hereunder
and including favorable written opinions of counsel with respect thereto and
(ii) such documents and certificates to confirm the Seller's, the Servicer's and
the Performance Guarantors' compliance with the Principal Agreements, in each
case as the Administrative Agent may reasonably request.
(s) The Collection Account shall be established and in existence
and free from any Lien other than pursuant to the Collection Account Control
Agreement.
(t) The Termination Date shall not have occurred.
(u) The aggregate outstanding balance of all Mortgage Loans which
have been subject to this Agreement since the date hereof and which have become
Fall-Out Loans does not exceed 10% of the aggregate Purchase Prices for all
purchases outstanding at such time.
(v) Each Mortgage Loan subject to such purchase on such date
shall have an interest rate of not less than 30-day LIBOR determined as of such
day plus 0.75%.
ARTICLE IV
ADMINISTRATION AND SERVICING OF LOANS
SECTION 4.01. Acceptance of Appointment; Duties of Servicer.
(a) AHMS is hereby appointed as the Servicer of the Mortgage
Loans purchased hereunder. AHMS hereby accepts such appointment and agrees to
act as Servicer under this
40
Agreement, for the benefit of the Purchasers, and the Purchasers and the Seller
hereby consent to AHMS acting as Servicer. The Servicer shall service,
administer and enforce such Mortgage Loans as Servicer in a manner consistent
with the terms of this Agreement. The Servicer shall have no further servicing
obligations or duties to the Purchasers under the terms of this Agreement with
respect to the relevant Mortgage Loans upon the purchase of such loan by the
applicable Approved Takeout Investor.
(b) The Servicer shall service and administer the Mortgage Loans
in the best interests of and on behalf of the Purchasers in accordance with this
Agreement, the terms of the Principal Mortgage Documents, the standard
requirements of the issuers of Takeout Commitments covering the same and to the
extent consistent with such terms, and Accepted Servicing Standards. The
Servicer shall at all times comply with applicable law, FHA regulations and VA
regulations and the requirements of any private mortgage insurer so that the FHA
insurance, VA guarantee or any other applicable insurance or guarantee in
respect of any Mortgage Loan is not voided or reduced. The Servicer shall at all
times maintain accurate and complete records of its servicing of the Mortgage
Loans, and the Administrative Agent may, and shall upon the reasonable request
of any Funding Agent, at any time during the Servicer's business hours on
reasonable prior notice, examine and make copies of such records. In addition,
if the sale of a Mortgage Loan is not made to the applicable Takeout Investor on
or before the Anticipated Settlement Date, the Servicer shall promptly deliver
to the Administrative Agent monthly reports regarding the status of such
Mortgage Loans, which reports shall include, but shall not be limited to, a
description of those Mortgage Loans in default for more than thirty (30) days,
and such other circumstances with respect to any Mortgage Loans (whether or not
such Mortgage Loans are included in the foregoing list) that could materially
adversely affect any of such Mortgage Loans, the Purchasers' ownership of any of
such Mortgage Loans or the collateral securing any of such Mortgage Loans. The
Servicer shall deliver such a report to the Administrative Agent every thirty
(30) days until (i) the sale of such Mortgage Loan to an Approved Takeout
Investor or another Person or (ii) such report is being provided by a Successor
Servicer. Following its receipt thereof, the Administrative Agent agrees to
promptly forward copies of such report to each Funding Agent.
SECTION 4.02. Replacement of Servicer.
(a) The Required Funding Agents shall be entitled, by written
notice to Seller and Servicer to effect termination of Servicer's servicing
rights and obligations respecting the affected Mortgage Loans in the event any
of the following circumstances or events ("Servicer Termination Events") occur
and are continuing:
(i) any failure by the Servicer to remit to the
Administrative Agent when due any payment or transfer of funds
required to be made by it under the terms of this Agreement which
continues unremedied for a period of five (5) calendar days after
the due date; provided, however, that such grace period shall not
apply to the Servicer's obligation to remit Collections to the
Collection Account pursuant to Section 5.02(a); or
(ii) failure by the Servicer duly to observe or perform in
any material respect any of its other covenants or agreements set
forth in this Agreement or in any
41
Principal Agreement which continues unremedied beyond the
expiration of any applicable grace or notice period; or
(iii) any representation, warranty or certification made
or deemed made herein or in any Principal Agreement by the
Servicer or in any certificate furnished to the Administrative
Agent, any Funding Agent or any Purchaser pursuant to the
provisions thereof, shall prove to have been false or misleading
in any material respect as of the time made or furnished; or
(iv) (A) the Servicer shall admit in writing its inability
to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be
instituted against the Servicer or by the Servicer seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment of
a receiver, trustee, or other similar official for it or for any
substantial part of its property and, in the case of an
involuntary proceeding described above, such proceeding shall
continue undismissed, unstayed and in effect for a period of
sixty (60) consecutive days; or (B) the Servicer's Board of
Directors shall vote affirmatively to authorize any of the
actions set forth in clause (A) above in this subsection (iv); or
(v) any action or omission to act by the Servicer which
constitutes gross negligence or willful misconduct causes a
Takeout Failure, such Takeout Failure shall continue unremedied
after the Cure Date and such occurrence has a Material Adverse
Effect; or
(vi) the Servicer ceases to meet the qualifications for
maintaining all applicable Approvals; or
(vii) the occurrence and continuance of a Termination
Event.
In the case of the event described in subsection (iv),
immediately upon the occurrence of any such event, regardless of whether notice
of such event shall have been given to or by the Administrative Agent, and in
each and every other case, so long as the Servicer Termination Event shall not
have been remedied (but only to the extent, and within the time period, of any
remedy period provided above), in addition to whatever rights the Purchasers may
have at law or equity to damages, including injunctive relief and specific
performance, by notice in writing to the Servicer and the Seller, the
Administrative Agent may (and shall at the direction of the Required Funding
Agents) terminate all the servicing rights and obligations of the Servicer under
this Agreement and assume control of the disposition of such servicing rights,
including the sale and transfer of such servicing rights as determined by the
Administrative Agent. Upon receipt by the Servicer and the Seller of such
written notice, subject to the terms of this Section 4.02, all authority and
power of the Servicer respecting its mortgage servicing rights and duties under
this Agreement, shall pass to and be vested in the successor servicer appointed
by the Required Funding Agents (a "Successor Servicer"). The Servicer, upon
receipt of such notice of
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termination, may negotiate the transfer, sale and assignment of its interest
under this Agreement to any Successor Servicer so appointed by the Required
Funding Agents. The Servicer's privilege of sale and transfer hereunder shall
terminate automatically if not exercised by completing the sale, transfer and
assignment on or before the last day of the second calendar month following the
month in which notice of termination shall have been given as provided above in
this Section 4.02. If such a sale and transfer by the Servicer is properly
consummated within the period of time specified in such notice, the Servicer may
retain the proceeds of the sale as liquidated damages, subject to any claims of
the Administrative Agent and the Purchasers for moneys due pursuant to this
Agreement.
If the Servicer, after notice of termination as above provided in
this Section 4.02, shall not have sold, transferred and assigned its interests
in this Agreement within the time permitted above, or the Servicer elects to
permit the Administrative Agent, on behalf of the Purchasers, to arrange such
sale, the Administrative Agent shall arrange for the transfer of servicing to
another party, and the Servicer shall continue servicing the Mortgage Loans
under this Agreement until the Administrative Agent gives the Servicer notice of
the transfer and its effective date. In arranging for the transfer, sale and
assignment of the Servicer's interests under this Agreement, the Administrative
Agent may at its sole option solicit, by public announcement, bids from
organizations reasonably acceptable to it for the purchase of the servicing
functions. Within ten (10) days after any such public announcement, the
Administrative Agent shall be authorized to negotiate and, subject to the
consent of the Required Funding Agents, effect the transfer, sale and assignment
of such servicing rights to the party submitting the highest satisfactory bid.
The Administrative Agent shall deduct all costs and expenses of any public
announcement and of any sale, transfer and assignment of such servicing rights
including, without limitation any brokerage fees, from any sum received by the
Purchasers from the successor to the Servicer for the sale, transfer and
assignment of such servicing rights. After such deductions, the remainder of
such sum shall be paid by the Administrative Agent to the Servicer for transfer
of the servicing rights and obligations under this Agreement to the Servicer's
successor.
Upon written request by the Administrative Agent, the Servicer
shall prepare, execute and deliver to the Successor Servicer any and all
documents and other instruments, place in such successor's possession all files
pertaining to such Mortgage Loans and do or cause to be done all other acts or
things necessary to effect the purposes of such notice of termination,
including, but not limited to, the transfer, endorsement and assignment of the
Mortgage Loans and related documents, at the Servicer's sole expense.
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SECTION 4.03. Indemnification by Servicer. The Servicer shall
indemnify and hold harmless each Indemnified Party against any and all Losses
resulting from or otherwise arising in connection with (i) the failure of the
Servicer to perform its obligations (including, without limitation, any failure
to perform servicing obligations) in accordance with the terms of this
Agreement, (ii) the breach by the Servicer of any representation or warranty
made by the Servicer in the Custodial Agreement, (iii) any commingling of
Collections with respect to the Mortgage Loans with funds of the Servicer, and
(iv) any Takeout Failure if such Takeout Failure was caused by the Servicer's
action or failure to take action.
ARTICLE V
ALLOCATION AND APPLICATION OF COLLECTIONS
SECTION 5.01. Rights of the Purchasers. The Net Investment shall
represent an ownership interest in the applicable Mortgage Loans and Takeout
Commitments, including the right to receive the Collections and other amounts at
the times and in the amounts specified in this Article V to be deposited in the
Collection Account or to be paid to the Purchasers.
SECTION 5.02. Establishment of Collection Account.
(a) Servicer shall establish and shall thereafter maintain with
the Custodian a segregated trust account in the name of the Administrative Agent
for the benefit of the Purchasers (the "Collection Account"). Any funds on
deposit from time to time in the Collection Account shall be deemed held in
trust for the benefit of the Purchasers. The Administrative Agent, for the
benefit of the Purchasers, shall possess all right, title and interest in all
funds on deposit from time to time in the Collection Account and in all proceeds
thereof. The Collection Account shall be under the sole dominion and control of
the Administrative Agent for the benefit of the Purchasers. The Collection
Account shall be dedicated to and used solely for the deposit of Collections.
Servicer shall not establish a new Collection Account without the prior written
consent of the Administrative Agent. If, at any time, the institution holding
the Collection Account ceases to be an Eligible Institution, Servicer shall
within thirty (30) days establish a new Collection Account meeting the
conditions specified above with an Eligible Institution, and shall transfer any
cash and/or any investments to such new Collection Account, and from the date
such new Collection Account is established, it shall be the "Collection
Account." Servicer shall have the power, revocable by the Administrative Agent
upon the written direction of the Funding Agents, to make withdrawals and
payments from the Collection Account in accordance with this Agreement and to
instruct the Administrative Agent to make withdrawals and payments from the
Collection Account for the purposes of carrying out the Servicer's or the
Administrative Agent's duties hereunder. The Servicer and the Seller shall
direct all Approved Takeout Investors to deposit Collections constituting
proceeds of the sales of the Mortgage Loans directly to the Collection Account.
All Collections constituting proceeds of the sales of the Mortgage Loans
otherwise remitted to the Servicer or Seller shall be remitted to the Collection
Account by the Servicer as soon as practicable, but in no event later than two
(2) Business Days after receipt. All Collections not constituting proceeds of
the sales of the Mortgage Loans shall be held in trust by the Servicer for the
benefit of the Administrative Agent until the following Remittance Date and on
each Remittance Date, all such Collections, together with all Collections
remitted to the
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Servicer pursuant to Section 5.03(v), shall be remitted by the Servicer to the
Collection Account; provided that at any time after the occurrence and during
the continuance of a Termination Event, all such Collections shall be remitted
to the Collection Account by the Servicer as soon as practicable, but in no
event later than two (2) Business Days after receipt.
(b) Funds on deposit in the Collection Account shall be invested
by the Eligible Institution in Eligible Investments in the name of the
Administrative Agent for the benefit of the Purchasers, as directed in writing
by the Servicer, that will mature or otherwise be available for withdrawal
without penalty on each Settlement Date, with all realized interest and other
investment earnings (net of losses and investment expenses) to remain a part of
the Collection Account. In the event that the Administrative Agent has not
received written directions from the Servicer, the Administrative Agent shall
invest any cash amounts in the Collection Account in Eligible Investments set
forth in clause (d) of the definition thereof. The Administrative Agent shall
provide to the Servicer monthly written confirmation of such investments,
describing the Eligible Investments in which such amounts have been invested.
Any funds in the Collection Account not so invested must be deposited by the
Custodian with an Eligible Institution and insured by the FDIC to the limits
established by the FDIC. Each Eligible Investment shall be a "securities
entitlement" within the meaning of Section 8-102(17) of the UCC.
SECTION 5.03. Allocations and Distributions on Settlement Dates.
On each Settlement Date, funds received into the Collection Account which
constitute Collections received in connection with the sale of any Mortgage Loan
shall be allocated and distributed by Servicer, or if the Administrative Agent
has delivered written notice to the Servicer that the Servicer shall no longer
make distributions of Collections, then by the Administrative Agent, in the
following priority:
(i) first, to each Funding Agent, for the benefit of the
applicable Purchasers in the related Purchaser Group, an amount
equal to such Purchaser Group's Pro Rata Share of the Net
Investment allocable to such Mortgage Loan relating to such
Settlement Date;
(ii) second, to each Funding Agent, for the benefit of the
applicable Purchasers in the related Purchaser Group, on a pro
rata basis, for any unpaid Yield from prior Remittance Dates and
Net Investment from prior Settlement Dates;
(iii) third, to or at the direction of the Seller, the
aggregate of the Completion Fees for such Mortgage Loans relating
to such Settlement Date;
(iv) fourth, to each applicable Funding Agent, for itself
and for the benefit of the applicable Purchasers in the related
Purchaser Group, and to the Administrative Agent, on a pro rata
basis, for any other amounts due to such parties, including,
without limitation, amounts due under Section 2.04, any unpaid
Program Fee, Administrative Agent Fee and Unused Fee from prior
Remittance Dates and any Indemnified Claims which are due and
unpaid; and
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(v) fifth, to the Servicer to be held in trust until the
next Remittance Date;
provided, however, (A) on and after the date on which a Termination Event
occurs, and (B) on any date on which the aggregate outstanding principal balance
of all Mortgage Loans which have not been sold to an Approved Takeout Investor
within 15 days after the Anticipated Settlement Date exceeds 20% of the
aggregate outstanding principal balance of all Mortgage Loans subject to this
Agreement as of such date, the amounts described in items (iii) and (v) above
shall be (1) retained in the Collection Account, (2) available on any subsequent
Settlement Date to be withdrawn from the Collection Account by the
Administrative Agent to pay shortfalls in the amounts described in items (i),
(ii) and (iv) above and (3) only remitted to the Seller and the Servicer, as
applicable, following the payment in full of the amounts described in items (i),
(ii) and (iv) above for all subsequent Settlement Dates. Notwithstanding the
foregoing, with respect to each Mortgage Pool, no Completion Fee shall be
retained in the Collection Account if after giving effect to such retention, the
sum of (i) the aggregate Takeout Deficiency Fees paid with respect to the
Mortgage Loans in such Mortgage Pool as of such date and (ii) the aggregate
Completion Fees for Mortgage Loans in such Mortgage Pool which have not been
paid to the Seller as of such date shall exceed 5% of the aggregate Purchase
Price for the Mortgage Loans included in such Mortgage Pool.
SECTION 5.04. Allocations and Distributions of Interest
Collections on Remittance Dates. On each Remittance Date, all Collections of
interest paid by or on behalf of the Mortgagors and all other Collections other
than those described in Sections 5.03 or 5.05 which are received into the
Collection Account shall be allocated and distributed by the Servicer, or if the
Administrative Agent has delivered written notice to the Servicer that the
Servicer shall no longer make distributions of Collections, then by the
Administrative Agent, in the following priority:
(i) first, to each Funding Agent, for the benefit of the
applicable Purchaser(s) in the related Purchaser Group, on a pro
rata basis, an amount equal to all accrued and unpaid Yield for
such Purchaser Group on the Net Investment related to all
Mortgage Loans which are subject to this Agreement as of such
Remittance Date and all Mortgage Loans which have been sold by
the Administrative Agent since the immediately preceding
Remittance Date and any other amounts payable pursuant to Section
7.02(d) hereof;
(ii) second, to the Administrative Agent and each Funding
Agent (for the benefit of the applicable Purchaser(s) in the
related Purchaser Group), on a pro rata basis, the Administrative
Agent Fee, the Unused Fee and the Program Fee relating to such
Remittance Date;
(iii) third, to each Funding Agent, for the benefit of the
applicable Purchasers in the related Purchaser Group, on a pro
rata basis, for any unpaid Yield from prior Remittance Dates and
Net Investment from prior Settlement Dates;
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(iv) fourth, to or at the direction of the Seller, the
aggregate amount of any remaining unpaid Completion Fees with
respect to the Mortgage Loans which were sold by the
Administrative Agent prior to such Remittance Date;
(v) fifth, to each applicable Funding Agent, for itself
and for the benefit of the applicable Purchasers in the related
Purchaser Group, and to the Administrative Agent, on a pro rata
basis, for any other amounts due to such parties, including,
without limitation, amounts due under Section 2.04, any unpaid
Program Fee, Administrative Agent Fee and Unused Fee from prior
Remittance Dates and any Indemnified Claims which are due and
unpaid; and
(vi) sixth, all remaining amounts to the Servicer, as the
Servicing Fee;
provided, however, (A) on and after the date on which a Termination Event
occurs, and (B) on any date on which the aggregate outstanding principal balance
of all Mortgage Loans which have not been sold to an Approved Takeout Investor
within 15 days after the Anticipated Settlement Date exceeds 20% of the
aggregate outstanding principal balance of all Mortgage Loans subject to this
Agreement as of such date, the amounts described in items (iv) and (vi) above
shall be (1) retained in the Collection Account, (2) available on any subsequent
Remittance Date to be withdrawn from the Collection Account by the
Administrative Agent to pay shortfalls in the amounts described in items (i)
through (iii) and (v) above and in Section 5.05 and (3) only remitted to the
Seller and the Servicer, as applicable, following the payment in full of the
amounts described in items (i) through (iii) and (v) above and in Section 5.05
for all subsequent Remittance Dates. Notwithstanding the foregoing, with respect
to each Mortgage Pool, no Completion Fee shall be retained in the Collection
Account if after giving effect to such retention, the sum of (i) the aggregate
Takeout Deficiency Fees paid with respect to the Mortgage Loans in such Mortgage
Pool as of such date and (ii) the aggregate Completion Fees for Mortgage Loans
in such Mortgage Pool which have not been paid to the Seller as of such date
shall exceed 5% of the aggregate Purchase Price for the Mortgage Loans included
in such Mortgage Pool. On the second Business Day preceding each Remittance
Date, each Funding Agent shall deliver a written notice to the Seller and the
Servicer stating the amount of all accrued and unpaid fees and Yield for its
related Purchaser Group on the Net Investment related to all Mortgage Loans
which will be subject to this Agreement as of the immediately succeeding
Remittance Date and all Mortgage Loans which have been sold by the
Administrative Agent since the immediately preceding Remittance Date.
SECTION 5.05. Allocations and Distributions of Principal
Collections on Remittance Dates. On each Remittance Date, funds received into
the Collection Account which constitute Collections of principal paid by the
Mortgagors on all Mortgage Loans and all amounts remitted to the Administrative
Agent pursuant to Section 2.04 shall be allocated and distributed by the
Servicer, or if the Administrative Agent has delivered written notice to the
Servicer that the Servicer shall no longer make distributions of Collections,
then by the Administrative Agent, in the following priority:
(i) first, to each Funding Agent, for the benefit of the
applicable Purchaser(s) in the related Purchaser Group, an amount
equal to such Purchaser
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Group's Pro Rata Share of the Net Investment allocable to the
Mortgage Loans for which such Collections were received;
(ii) second, to each Funding Agent, for the benefit of the
applicable Purchasers in the related Purchaser Group, on a pro
rata basis, for any unpaid Yield from prior Remittance Dates and
Net Investment from prior Settlement Dates;
(iii) third, to or at the direction of the Seller, the
aggregate amount of any remaining unpaid Completion Fees with
respect to the Mortgage Loans which were sold by the
Administrative Agent prior to such Remittance Date;
(iv) fourth, to each applicable Funding Agent, for itself
and for the benefit of the applicable Purchasers in the related
Purchaser Group, and to the Administrative Agent, on a pro rata
basis, for any other amounts due to such parties, including,
without limitation, amounts due under Section 2.04, any unpaid
Program Fee, Administrative Agent Fee and Unused Fee from prior
Remittance Dates and any Indemnified Claims which are due and
unpaid; and
(v) fifth, all remaining amounts to the Servicer, as the
Servicing Fee;
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provided, however, (A) on and after the date on which a Termination Event occurs
and (B) on any date on which the aggregate outstanding principal balance of all
Mortgage Loans which have not been sold to an Approved Takeout Investor within
15 days after the Anticipated Settlement Date exceeds 20% of the aggregate
outstanding principal balance of all Mortgage Loans subject to this Agreement as
of such date, the amounts described in items (iii) and (v) above shall be (1)
retained in the Collection Account, (2) available on any subsequent Remittance
Date to be withdrawn from the Collection Account by the Administrative Agent to
pay shortfalls in the amounts described in items (i), (ii) and (iv) above and
(3) only remitted to the Seller and the Servicer, as applicable, following the
payment in full of the amounts described in items (i), (ii) and (iv) above for
all subsequent Remittance Dates. Notwithstanding the foregoing, with respect to
each Mortgage Pool, no Completion Fee shall be retained in the Collection
Account if after giving effect to such retention, the sum of (i) the aggregate
Takeout Deficiency Fees paid with respect to the Mortgage Loans in such Mortgage
Pool as of such date and (ii) the aggregate Completion Fees for Mortgage Loans
in such Mortgage Pool which have not been paid to the Seller as of such date
shall exceed 5% of the aggregate Purchase Price for the Mortgage Loans included
in such Mortgage Pool.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES; COVENANTS
SECTION 6.01. Representations of the Seller and the Servicer.
The Seller and the Servicer each represents and warrants, as to
itself, on the date hereof and on each Purchase Date to the Administrative
Agent, the Funding Agents and the Purchasers as follows:
(a) Organization and Good Standing. It (i) is a corporation duly
organized and existing in good standing under the laws of the jurisdiction of
its organization, (ii) is duly qualified to do business and in good standing in
all jurisdictions in which its failure to be so qualified could have a Material
Adverse Effect, (iii) has the requisite entity power and authority to own its
properties and assets and to transact the business in which it is engaged and is
or will be qualified in those states wherein it proposes to transact business in
the future except to the extent the failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect and (iv) is in
compliance with all Requirements of Law. American Home Mortgage Corp. is
incorporated in New York and in no other jurisdiction, and American Home
Mortgage Servicing, Inc. is incorporated in Maryland and in no other
jurisdiction.
(b) Authorization and Power. It has the requisite entity power
and authority to execute, deliver and perform this Agreement and the other
Principal Agreements to which it is a party; it is duly authorized to and has
taken all requisite entity action necessary to authorize it to, execute, deliver
and perform this Agreement and the other Principal Agreements to which it is a
party and is and will continue to be duly authorized to perform this Agreement
and such other Principal Agreements.
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(c) No Conflicts or Consents. Neither the execution and delivery
by it of this Agreement or the other Principal Agreements to which it is a
party, nor the consummation of any of the transactions herein or therein
contemplated, nor compliance with the terms and provisions hereof or with the
terms and provisions thereof, will (i) contravene or conflict with any
Requirement of Law to which it is subject, or any indenture, mortgage, deed of
trust, or other agreement or instrument to which it is a party or by which it
may be bound, or to which its property may be subject, or (ii) result in the
creation or imposition of any Lien, other than the Liens of the Administrative
Agent pursuant to this Agreement on the property of the Seller.
(d) Enforceable Obligations. This Agreement and the other
Principal Agreements to which it is a party have been duly and validly executed
by it and are its legal, valid and binding obligations, enforceable in
accordance with their respective terms, except as limited by the Enforceability
Exceptions.
(e) Full Disclosure. There is no fact known to it that it has not
disclosed to the Administrative Agent and the Funding Agents that could
reasonably be expected to have a Material Adverse Effect. Neither its financial
statements nor any Monthly Statements, reports, officer's certificate or
statement delivered by it to the Administrative Agent, the Funding Agents or the
Purchasers in connection with this Agreement, contains any untrue or inaccurate
statement of material fact or omits to state a material fact necessary to make
such information not misleading.
(f) No Default. It is not in default under any loan agreement,
mortgage, security agreement or other agreement or obligation to which it is a
party or by which any of its property is bound, if such default would also be a
Termination Event (or, with notice or passage of time would become a Termination
Event) under either of subparagraphs (g) or (h) of Section 8.01 of this
Agreement.
(g) Litigation.
(i) Except as set forth on Schedule D, there are no
actions, suits or proceedings, including arbitrations and
administrative actions, at law or in equity (other than, in the
case of the Servicer, any actions, suits or proceedings with
damage claims of $1,000,000 or less), either by or before any
Governmental Authority, now pending or, to its knowledge,
threatened by or against it or any of its Subsidiaries, and
pertaining to any Governmental Requirement affecting its property
or rights or any of its Subsidiaries which if determined
adversely, could reasonably be expected to have a Material
Adverse Effect.
(ii) Neither it nor any of its Subsidiaries is in default
with respect to any Governmental Requirements.
(iii) It is not liable on any judgment, order or decree
(or any series of judgments, orders, or decrees) that could
reasonably be expected to have a Material Adverse Effect and that
has not been paid, stayed or dismissed within 60 days.
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(h) Taxes. All tax returns required to be filed by it in any
jurisdiction have been filed, except where extensions of time to make those
filings have been granted by the appropriate taxing authorities and the
extensions have not expired, and all taxes, assessments, fees and other
governmental charges upon it or upon any of its properties, income or franchises
have been paid prior to the time that such taxes could give rise to a Lien
thereon, unless protested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been established on its
books. There is no tax assessment or to Seller's and Servicer's best knowledge,
proposed tax assessment against it that could reasonably be expected to have a
Material Adverse Effect.
(i) Permits, Patents, Trademarks, Etc.
(i) It has all permits and licenses necessary for the
operation of its business except to the extent the failure to
maintain such permits or licenses could not reasonably be
expected to have a Material Adverse Effect.
(ii) It owns or possesses (or is licensed or otherwise has
the necessary right to use) all patents, trademarks, service
marks, trade names and copyrights, technology, know-how and
processes, and all rights with respect to the foregoing, which
are necessary for the operation of its business, without any
conflict with the rights of others. The consummation of the
transactions contemplated hereby will not alter or impair any of
such rights of it.
(j) Status Under Certain Federal Statutes. It is not an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
(k) No Approvals Required. Other than consents and approvals
previously obtained and actions previously taken, neither the execution and
delivery of this Agreement and the other Principal Agreements to which it is a
party, nor the consummation of any of the transactions contemplated hereby or
thereby requires the consent or approval of, the giving of notice to, or the
registration, recording or filing by it of any document with, or the taking of
any other action in respect of, any Governmental Authority that has jurisdiction
over it or any of its property.
(l) Environmental Matters. There have been no past, and there are
no pending or to the Seller's knowledge threatened, claims, complaints, notices,
or governmental inquiries against it regarding any alleged violation of, or
potential liability under, any environmental laws that could reasonably be
expected to have a Material Adverse Effect. It and its properties are in
substantial compliance in all respects with all environmental laws and related
licenses and permits, unless the failure to comply strictly in all respects with
all environmental laws and related licenses and permits could reasonably be
expected to have a Material Adverse Effect. No conditions exist at, on or under
any property now or previously owned or leased by it that could give rise to
liability under any environmental law that could be expected to have a Material
Adverse Effect.
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(m) Eligibility. It is approved and qualified and in good
standing as a lender or seller/servicer, as follows:
(i) It is a FNMA approved seller/servicer and a FNMA
approved seller (in good standing) of mortgage loans, eligible to
originate, purchase, hold, sell and service mortgage loans to be
sold to FNMA.
(ii) It is a FHLMC approved seller/servicer (in good
standing) of mortgage loans, eligible to originate, purchase,
hold, sell and service mortgage loans to be sold to FHLMC.
(iii) It is an approved FHA servicer, VA servicer and GNMA
issuer (in good standing) of mortgage loans, eligible to
originate, purchase, hold, sell and service mortgage loans to be
pooled into GNMA mortgage-backed securities pools and to issue
GNMA mortgage-backed securities.
(n) Location of Records. The office where it keeps all the books,
records and other information (including, without limitation, computer programs,
tapes, disks, punch cards, data processing software and related property and
rights) maintained by it with respect to the Mortgage Loans and other related
assets purchased hereunder are located at its address referred to in Section
11.07 hereof.
(o) Validity of Takeout Commitments. Each Takeout Commitment
subject to a Trade Assignment constitutes a valid and enforceable commitment by
the Approved Takeout Investor to purchase the Mortgage Loans at the price set
forth in such Takeout Commitment.
(p) Employee Benefit Plans. (i) No Employee Plan of the Seller,
the Servicer or any ERISA Affiliate has incurred an "accumulated funding
deficiency" (as defined in Section 302 of ERISA or Section 412 of the Code),
(ii) neither the Seller, the Servicer nor any ERISA Affiliate has incurred
liability under ERISA to the PBGC, (iii) neither the Seller, the Servicer nor
any ERISA Affiliate has partially or fully withdrawn from participation in a
Multiemployer Plan, (iv) no Employee Plan of the Seller, the Servicer or any
ERISA Affiliate has been the subject of involuntary termination proceedings, (v)
neither the Seller, the Servicer nor any ERISA Affiliate has engaged in any
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code), and (vi) no "reportable event" (as defined in Section 4043 of ERISA)
has occurred in connection with any Employee Plan of the Seller, the Servicer or
any ERISA Affiliate other than events for which the notice requirement is waived
under applicable PBGC regulations.
SECTION 6.02. Additional Representations of the Seller. The
Seller further represents and warrants on the date hereof and on each Purchase
Date to the Administrative Agent, the Funding Agents and the Purchasers as
follows:
(a) Solvency. Both prior to and after giving effect to each
purchase hereunder, (i) the fair value of the property of the Seller is greater
than the total amount of liabilities, including contingent liabilities, of the
Seller, (ii) the present fair salable value of the assets of the
52
Seller is not less than the amount that will be required to pay all probable
liabilities of the Seller on its debts as they become absolute and matured,
(iii) the Seller does not intend to, and does not believe that it will, incur
debts or liabilities beyond the Seller's abilities to pay such debts and
liabilities as they mature and (iv) the Seller is not engaged in a business or a
transaction, and is not about to engage in a business or a transaction, for
which the Seller's property would constitute unreasonably small capital.
(b) Ownership Interest. Upon each purchase of Mortgage Loans by
the Purchasers hereunder, the Purchasers shall acquire all of the Seller's
right, title and interest in and to such assets purchased hereunder and, in case
any such transaction is deemed by any court or regulatory authority not to be a
purchase and sale of the relevant Mortgage Loans, a valid and perfected first
priority interest in each such Mortgage Loan then existing or thereafter
arising, in each case free and clear of any Lien except as provided herein or
arising as a result of any action taken by the Administrative Agent or any
assignee thereof; and no effective financing statement or other instrument
similar in effect, covering any Mortgage Loan, any interest therein, or the
related Collateral with respect thereto is on file in any recording office
except such as may be filed in favor of the Administrative Agent on behalf of
the Purchasers in accordance with this Agreement or in connection with a Lien
arising solely as the result of any action taken by the Purchasers (or any
assignee thereof) or by the Administrative Agent.
(c) No Liens. Each Mortgage Loan purchased by the Purchasers
hereunder, immediately prior to the sale to the Purchasers hereunder, shall be
owned by the Seller free and clear of any Lien, except those arising as a result
of any action taken by the Administrative Agent (for the benefit of the
Purchasers) or any assignee thereof.
(d) Financial Condition. The balance sheet of the Seller as at
June 30, 2006, a copy of which has been furnished to the Funding Agents, fairly
presents the financial condition of the Seller as at such date, in accordance
with GAAP, and since June 30, 2006, there has been no material adverse change in
the business, operations, property or financial condition of the Seller.
(e) Principal Office, Etc. The principal office, chief executive
office and principal place of business of:
(i) American Home Mortgage Corp. is at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and
(ii) American Home Mortgage Servicing, Inc. is at ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (executive offices),
and its principal place of business is at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
or at such other locations of which the Administrative Agent has been notified
in accordance with Section 6.06(e).
53
(f) Trade Names. The Seller's legal name is as set forth in this
Agreement, and the Seller is not known by and does not use any trade name,
fictitious name, assumed name or doing-business-as name except as set forth on
Schedule F.
(g) Eligible Mortgage Loans. Each Mortgage Loan is an Eligible
Mortgage Loan as of its related Purchase Date.
SECTION 6.03. Additional Representations and Warranties of the
Servicer. The Servicer represents and warrants on the date hereof and on each
Purchase Date to the Administrative Agent, the Funding Agents and the Purchasers
as follows:
(a) Financial Condition.
(i) The Servicer has delivered to the Administrative Agent
(x) copies of AHMIC's consolidated balance sheet, as of June 30,
2006, and the related consolidated statements of income,
stockholder's equity and cash flows for the year ended on such
date, audited by independent certified public accountants of
recognized national standing and (y) copies of each Performance
Guarantor's balance sheet, as of June 30, 2006, and the related
consolidated statements of income, and with respect to AHMIC
only, stockholder's equity and cash flows for the six months
ended on such date, ("Interim Statements"); and all such
financial statements fairly present the financial condition of
the Seller and the Servicer as of their respective dates,
subject, in the case of the Interim Statements, to normal year
end adjustments and the results of operations of the Seller and
the Servicer for the periods ended on such dates and have been
prepared in accordance with GAAP.
(ii) As of the date thereof, there are no obligations,
liabilities or Indebtedness (including contingent and indirect
liabilities and obligations or unusual forward or long-term
commitments) of the Seller or the Servicer required to be
recorded under GAAP that are not reflected on their financing
statements.
(iii) No change that constitutes a Material Adverse Effect
has occurred in the financial condition or business of the Seller
or the Servicer since June 30, 2006.
(b) Ownership. On the date of this Agreement, AHMIC has
beneficial ownership, directly or indirectly, of 100% of the issued and
outstanding shares of each class of the stock of the Servicer and the Seller.
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SECTION 6.04. Survival of Representations. All representations
and warranties by the Seller and the Servicer herein shall survive the making of
the purchases hereunder, and any investigation at any time made by or on behalf
of the Administrative Agent, the Funding Agents or the Purchasers shall not
diminish the right of the Administrative Agent, the Funding Agents or the
Purchasers to rely thereon.
SECTION 6.05. Covenants. The Seller and the Servicer shall each
at all times comply with the covenants applicable to it contained in this
Section 6.05, from the date hereof until this Agreement terminates and the date
all obligations of the Seller and the Servicer hereunder are indefeasibly paid
in full.
(a) Financial Statements and Reports. The Seller and/or the
Servicer, as applicable, shall furnish to the Funding Agents the following, all
in form and detail reasonably satisfactory to the Funding Agents:
(i) promptly after becoming available, and in any event
within 120 days after the close of each Fiscal Year of AHMIC,
AHMIC's audited consolidated and consolidating balance sheet as
of the end of such Fiscal Year, and the related statements of
income, stockholder's equity and cash flows of AHMIC for such
year showing within such consolidating balance sheets and
statements of income the balance sheet and statements of income
for the Seller accompanied by (i) the related report of
independent certified public accountants reasonably acceptable to
the Funding Agents, which report shall be to the effect that such
statements have been prepared in accordance with GAAP applied on
a basis consistent with prior periods except for such changes in
such principles with which the independent certified public
accountants shall have concurred and (ii) if issued, the
auditor's letter or report to management customarily given in
connection with such audit;
(ii) promptly after becoming available, and in any event
within 60 days after the end of each fiscal quarter, excluding
the fourth fiscal quarter, of each Fiscal Year of AHMIC, the
unaudited consolidated and consolidating balance sheet of AHMIC
as of the end of such fiscal quarter and the related statements
of income, stockholders' equity and cash flows of AHMIC for such
fiscal quarter and the period from the first day of the then
current Fiscal Year of the Performance Guarantors through the end
of such fiscal quarter, showing within such consolidating balance
sheets and statements of income the balance sheet and statements
of income for the Servicer certified by a Financial Officer of
the Servicer, to have been prepared in accordance with GAAP
applied on a basis consistent with prior periods, subject to
normal year-end adjustments;
(iii) promptly upon receipt thereof, a copy of each other
report submitted to each of the Servicer, the Seller and the
Performance Guarantors by independent certified public
accountants in connection with any annual, interim or special
audit of the books of such Person;
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(iv) promptly and in any event within twenty (20) days
after the reasonable request of the Administrative Agent or any
Funding Agent at any time and from time to time, a certificate,
executed by a responsible officer of the Servicer and the Seller,
setting forth all of such Person's warehouse borrowings and a
description of the collateral related thereto;
(v) promptly and in any event within 60 days after the end
of each of the first three (3) quarters in each Fiscal Year of
the Seller, and within 120 days after the close of the Seller's
Fiscal Year, completed officer's certificates in the from of
Exhibits I-1 and I-2 hereto, executed by the president or chief
financial officer of each of the Seller and the Servicer,
respectively;
(vi) upon written request of the Administrative Agent (who
shall so request at the request of any Funding Agent), promptly
and in any event within 60 days after the end of each quarter
(120 days in the case of the fourth quarter), a management report
regarding the Seller's Mortgage Loan production for the prior
quarter and year-to-date, in form and detail as reasonably
required by the Administrative Agent;
(vii) promptly furnish copies of all reports and notices
with respect to any "reportable event" defined in Title IV of
ERISA that the Seller or the Servicer files or that the Seller or
the Servicer is required to file under ERISA with the Internal
Revenue Service, the PBGC or the U.S. Department of Labor or that
the Seller or the Servicer receives from the PBGC;
(viii) immediately after (A) becoming aware of the
expiration, forfeiture, termination, or cancellation of, or
default under, any Takeout Commitment, or (B) the receipt of any
notice from, or the taking of any other action by any Approved
Takeout Investor indicating an intent not to honor, or claiming a
default under a Sale Agreement or Takeout Commitment that could
reasonably be expected to have a Material Adverse Effect if such
Takeout Commitment is not replaced with another Takeout
Commitment, the Seller or Servicer shall provide telephone notice
thereof confirmed in writing within one (1) Business Day,
together with a detailed statement by a responsible officer of
the Seller specifying the nature of the event and what action the
Seller is taking or proposes to take with respect thereto;
(ix) promptly after the Seller obtains knowledge thereof,
notice of any Termination Event or Potential Termination Event;
(x) promptly after the Servicer obtains knowledge thereof,
notice of any Servicer Termination Event or of any condition or
event that, with the giving of notice or lapse of time or both
and unless cured or waived, would constitute a Servicer
Termination Event;
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(xi) promptly following the request of the Administrative
Agent or any Funding Agent, a copy of the "HUD Audit Opinion" or
"Agency Audit Opinion", as applicable; and
(xii) such other material information concerning the
business, properties or financial condition of the Seller or the
Servicer as the Administrative Agent or any Funding Agent may
reasonably request.
(b) Taxes and Other Liens. The Seller shall pay and discharge
promptly all taxes, assessments and governmental charges or levies imposed upon
it or upon its income or upon any of its property as well as all claims of any
kind (including claims for labor, materials, supplies and rent) that, if unpaid,
might become a Lien upon any or all of its property; provided, however, the
Seller shall not be required to pay any such tax, assessment, charge, levy or
claim if the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings diligently conducted by it or
on its behalf and if it shall have set up reserves therefor adequate under GAAP.
(c) Maintenance. The Seller shall maintain its existence solely
as a New York corporation and shall comply with all Governmental Requirements
except to the extent the failure to so comply could not reasonably be expected
to have a Material Adverse Effect. The Servicer shall maintain its corporate
existence and shall comply with all Governmental Requirements except to the
extent the failure to so comply could not reasonably be expected to have a
Material Adverse Effect.
(d) Filing; Further Assurances. No later than the initial
Purchase Date, the Seller shall deliver to the Administrative Agent for filing,
the UCC-1 financing statements or other Lien perfection documents described in
Section 3.02 hereof, which financing statements or Lien perfection documents may
be prepared and filed, to the extent effective under applicable state law, in
the form of a master or bulk filing describing all Mortgage Loans which are from
time to time purchased by the Purchasers hereunder. The Seller and the Servicer
shall, each within three (3) Business Days after the request of the
Administrative Agent, cure any defects in the execution and delivery of this
Agreement or any other Principal Agreement. The Seller and the Servicer shall,
each at its expense, promptly execute and deliver to the Administrative Agent,
upon the Administrative Agent's reasonable request, all such other and further
documents, agreements and instruments necessary to keep the Seller and the
Servicer, as applicable, in compliance with the covenants and agreements of the
Seller and the Servicer, respectively, in this Agreement and in the other
Principal Agreements or to further evidence and more fully describe the
collateral intended as security for the Notes, or to correct any omissions in
this Agreement or the other Principal Agreements, or more fully to state the
security for the obligations set out herein or in any of the other Principal
Agreements, or to perfect, protect or preserve any Liens created (or intended to
be created) pursuant to any of the other Principal Agreements, or to make any
recordings, to file any notices, or obtain any consents.
(e) Compliance with Laws. The Seller and the Servicer will each
comply, in all material respects, with all acts, rules, regulations, orders,
decrees and directions of any Governmental Authority applicable to the Mortgage
Loans or any part thereof (including,
57
without limitation, any Agency Guidelines); provided, however, that the Seller
and the Servicer may contest any act, regulation, order, decree or direction in
any reasonable manner which shall not materially and adversely affect the rights
of the Purchasers hereunder. The Seller and the Servicer shall each maintain all
qualifications and approvals required under Agency Guidelines and all other
state and federal licenses, franchises, qualifications and/or approvals
necessary to perform its obligations hereunder. The Seller and the Servicer will
each comply with all Requirements of Law applicable to it, except where the
failure to comply could not reasonably be expected to have a Material Adverse
Effect.
(f) Insurance.
(i) The Seller and the Servicer shall each maintain with
financially sound and reputable insurers, insurance with respect
to its properties and business against such liabilities,
casualties, risks and contingencies and in such types and amounts
as is customary in the case of Persons engaged in the same or
similar businesses and similarly situated, including, without
limitation, a fidelity bond or bonds in form and with coverage
and with a company reasonably satisfactory to the Administrative
Agent and with respect to such individuals or groups of
individuals as the Administrative Agent may designate. Upon
request of the Administrative Agent, the Seller and the Servicer
shall each furnish or cause to be furnished to the Administrative
Agent from time to time a summary of the insurance coverage of
the Seller and the Servicer, respectively, in form and substance
reasonably satisfactory to the Administrative Agent and if
requested shall furnish the Administrative Agent with copies of
the applicable policies.
(ii) With respect to the Mortgages (i) the Servicer shall
cause the improvements on the land covered by each Mortgage to be
kept continuously insured at all times by responsible insurance
companies against fire and extended coverage hazards under
policies, binders, letters, or certificates of insurance, with a
standard mortgagee clause in favor of the original mortgagee and
its successors and assigns or, in the case of a MERS Designated
Mortgage Loan, the beneficial owner of such mortgage loan, and
(ii) the Servicer shall cause each such policy to be in an amount
equal to the lesser of the maximum insurable value of the
improvements or the original principal amount of the Mortgage,
without reduction by reason of any co-insurance, reduced rate
contribution, or similar clause of the policies or binders.
(g) Accounts and Records. The Seller and the Servicer shall each
keep books of record and account in which full, true and correct entries will be
made of all material dealings or transactions in relation to its business and
activities, in accordance with GAAP. The Seller and the Servicer shall each
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate all records pertaining to the
performance of the Seller's obligations under the Sale Agreements and Takeout
Commitments and other agreements made with reference to any Mortgage Loans in
the event of the destruction of the originals of such records) and keep and
maintain all documents, books, records, computer tapes and other information
necessary or advisable for the performance by the Seller and the Servicer
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of its obligations hereunder. The Servicer will, at its own cost and expense,
retain the Loan Management System as a master record of the Mortgage Loans.
(h) Periodic Visits. The Seller and the Servicer shall permit any
officer, employee or agent of the Administrative Agent (including an independent
certified public accountant selected by the Administrative Agent) to visit (each
such visit, a "Periodic Visit") and inspect any of its properties, examine its
books of record and accounts, documents (including without limitation computer
tapes and disks), telecopies and extracts from the foregoing, and discuss its
affairs, finances and accounts with its officers, accountants, and auditors, and
to review the business of originating the Mortgage Loans, the sale of the
Mortgage Loans by the Seller, and the servicing of the Mortgage Loans by the
Servicer, including the Servicer's collections systems, all during reasonable
business hours upon reasonable prior notice and as often as the Administrative
Agent may desire and no more than twice a year unless a Termination Event has
occurred and is continuing. The Seller agrees to pay the reasonable costs of
reviews and inspections performed pursuant to this Section 6.05(h), including
the costs and expenses charged by the certified public accountant in preparing
and delivering to the Administrative Agent with respect to the certified public
accountant's review on a scope and in a form reasonably acceptable to the
Administrative Agent and each Funding Agent (such report, a "Report of Visit");
provided that if a Report of Visit is prepared and delivered to the
Administrative Agent pursuant to another mortgage loan purchase or financing
facility with the Seller, such Report of Visit will satisfy the obligation to
deliver a Report of Visit hereunder. A Report of Visit shall be delivered at
least once per calendar year. Notwithstanding the foregoing, the Seller agrees
to pay the reasonable costs and expenses charged by a certified public
accountant in connection with a collateral audit for agreed upon procedures
conducted at the direction of the Administrative Agent (i) within three (3)
months after the date hereof and (ii) thereafter no more frequently than once
each twelve (12) month period beginning on May 1 of each year during the term of
this Agreement.
(i) Notice of Certain Events. The Seller and the Servicer shall
each promptly notify the Administrative Agent in writing upon (a) the receipt of
any notice from, or the taking of any other material action by, the holder of
any of its promissory notes, debentures or other evidences of Indebtedness with
respect to a claimed default, together with a detailed statement by a
responsible officer of the Seller or the Servicer, as the case may be,
specifying the notice given or other material action taken by such holder and
the nature of the claimed default and what action the Seller or the Servicer is
taking or proposes to take with respect thereto, but only if such alleged
default or event of default (if it were true) would also be a Termination Event
or a Potential Termination Event under this Agreement; (b) the commencement of,
or any determination in, any legal, judicial or regulatory proceedings that, if
adversely determined, could also be a Termination Event or a Potential
Termination Event under this Agreement; (c) any dispute between the Seller or
the Servicer, as the case may be, and any Governmental Authority or any other
Person that, if adversely determined, could have a Material Adverse Effect; (d)
any adverse change in the business or financial condition of the Seller or the
Servicer, including, without limitation, the Seller's or the Servicer's
insolvency, that could reasonably be expected to have a Material Adverse Effect;
(e) any other event or condition known to it that could reasonably be expected
to have a Material Adverse Effect; (f) the receipt of any notice from, and or
the taking of any action by any Governmental Authority indicating an intent to
59
cancel the Seller's or the Servicer's right to be either a seller or servicer of
such Governmental Authority's insured or guaranteed Mortgage Loans; (g) the
receipt of any notice of any final judgment or order for payment of money
applicable to the Servicer that could reasonably be expected to have a Material
Adverse Effect, or the receipt of any notice of any final judgment or order for
payment of money applicable to the Seller and (h) any downgrade in the senior
long-term unsecured debt rating of any Approved Takeout Investor to below BBB+
or Baa1 by Standard & Poor's or ▇▇▇▇▇'▇ respectively. Upon receipt of any notice
under this Section 6.05(i), the Administration Agent shall provide a copy of
such notice to each of the Funding Agents.
(j) Performance of Certain Obligations. The Seller and the
Servicer shall each perform and observe each of the provisions of each Mortgage
Loan, Sale Agreement, Takeout Commitment and Trade Assignment on its part to be
performed or observed and will cause all things to be done that are necessary to
have each Mortgage Loan comply with the requirements of such Sale Agreement,
Takeout Commitment and Trade Assignment.
(k) Credit and Collection Policy. Each of the Seller and the
Servicer will comply in all material respects with its Credit and Collection
Policy with respect to the Mortgage Loans.
(l) Compliance with Material Agreements. The Seller and the
Servicer shall each comply in all material respects with all agreements,
indentures, mortgages or documents (including, with respect to the Seller, the
Articles of Organization) binding on it or materially affecting its property or
business in all cases where the failure to so comply could reasonably be
expected to result in a Material Adverse Effect.
(m) Operations and Properties. The Seller and the Servicer shall
each act prudently and in accordance with customary industry standards in
managing and operating its property and shall continue to underwrite, hedge and
sell mortgage loans in the same diligent manner it has applied in the past.
(n) Environmental Compliance. The Seller and the Servicer shall
each use and operate all of its facilities and properties in compliance with all
environmental laws, keep all necessary permits, approvals, certificates,
licenses and other authorizations relating to environmental matters in effect
and remain in compliance therewith, and handle all hazardous materials in
compliance with all applicable environmental laws.
(o) Special Affirmative Covenants Concerning Collateral. The
Seller shall at all times warrant and defend the right, title and interest of
the Purchasers and the Administrative Agent in and to the Collateral against the
claims and demands of all Persons whomsoever. In addition, the Servicer shall,
no less than on an annual basis, review financial statements, compliance with
financial parameters, FNMA and FHLMC approvals (if applicable), and state
licenses of all Persons from whom the Sellers acquire Mortgage Loans.
(p) Treatment as a Sale. The Seller will account for the
transactions contemplated by this Agreement as sales as defined by GAAP and for
federal income tax purposes.
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(q) Servicer Reporting. The Servicer will deliver to the Funding
Agents and the Administrative Agent:
(i) on each Remittance Date, a Monthly Statement for the
immediately preceding month;
(ii) on each Business Day on which any Mortgage Loans
constitute Wet Loans, a report showing the percentage of the
Mortgage Loans which constitute Wet Loans as of such day; and
(iii) on each Business Day, a Daily Report.
SECTION 6.06. Negative Covenants. The Seller and the Servicer
shall each at all times comply with the covenants applicable to it contained in
this Section 6.06, from the date hereof until the later of the Termination Date
and the date all of the Obligations are indefeasibly paid in full:
(a) Limitations on Mergers and Acquisitions. It shall not (i)
merge or consolidate with or into any corporation or other entity unless it is
the surviving entity of any such merger or consolidation or it has obtained the
Administrative Agent's prior written consent or (ii) liquidate or dissolve.
(b) Fiscal Year. Neither the Seller nor the Servicer shall change
its fiscal year other than to conform with changes that may be made to the
Performance Guarantors' fiscal year and then only after notice to the
Administrative Agent and after whatever amendments are made to this Agreement as
may be reasonably required by the Administrative Agent and the Funding Agents,
in order that the reporting criteria for the Termination Events contained in
Section 8.01 (z) through (dd) remain substantially unchanged.
(c) Actions with Respect to Collateral.
(i) Neither the Seller nor the Servicer shall compromise,
extend, release, or adjust payments on any Collateral, accept a
conveyance of mortgaged property in full or partial satisfaction
of any Mortgage debt or release any Mortgage securing or
underlying any Collateral, except as permitted by the related
Approved Takeout Investor or as contemplated in the servicing
guidelines distributed thereby and only if such action would not
result in a Termination Event or a Potential Termination Event.
(ii) The Seller shall not agree to the amendment or
termination of any Sale Agreement or Takeout Commitment in which
the Administrative Agent has an interest or to substitution of a
Takeout Commitment for a Takeout Commitment in which the
Administrative Agent has a security interest hereunder, if such
amendment, termination or substitution may be expected (as
determined by the Administrative Agent in its sole discretion) to
have a Material Adverse Effect or to result in a Termination
Event or a Potential Termination Event.
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(iii) The Seller shall not transfer, sell, assign or
deliver any Collateral sold to the Administrative Agent to any
Person other than the Administrative Agent, except pursuant to a
Takeout Commitment.
(iv) The Seller shall not grant, create, incur, permit or
suffer to exist any Lien upon any Collateral except for (i) Liens
granted to the Administrative Agent hereunder, and (ii) Liens
granted to other Persons with respect to Takeout Commitments, so
long as the amounts owing to all such Persons and the
Administrative Agent hereunder shall not exceed the principal
amount of all Takeout Commitments.
(d) Employee Benefit Plans. Neither the Seller nor the Servicer
may permit any of the events or circumstances described in Section 6.01(p) to
exist or occur.
(e) Change of Principal Office. Neither the Seller nor the
Servicer shall move its principal office, executive office or principal place of
business from the address set forth in Section 6.02(e) without 30-days' prior
written notice to the Administrative Agent. The Seller shall not change its
name, identity or place of organization or corporate structure, or add a new
jurisdiction of organization without 30 days' prior written notice to the
Administrative Agent.
(f) Deposits to Collection Account. Neither the Seller nor the
Servicer shall deposit or otherwise credit, or cause or permit to be so
deposited or credited, to the Collection Account, cash or cash proceeds other
than proceeds of the Collateral.
(g) Takeout Commitments. Neither the Seller nor the Servicer
shall perform any action or fail to take any action which would permit the
related Approved Takeout Investor to refuse to purchase any Mortgage Loan under
the terms of the Takeout Commitment or any related document or agreement.
(h) Principal Agreements. The Seller will perform all of its
obligations under each Principal Agreement to which it is a party and will
enforce each Principal Agreement to which it is a party in accordance with its
terms in all respects.
SECTION 6.07. Other Credit Agreements. Each party hereto agrees:
(a) if the any of the financial covenants or related definitions
set forth in the Credit Agreement which correspond to the Termination Events set
forth in Section 8.01(z) through (dd) are amended after the date hereof and SG,
in its capacity as a lender under the Credit Agreement, has agreed to such
amendment in writing, then the parties hereto shall amend Section 8.01 or the
related definitions, as applicable, to conform to the related financial
covenants set forth in the Credit Agreement;
(b) if any of Sections 5.1(n), 6.1, 6.18, 7.2, 8.1(d), 8.1(e), or
8.1(q) of the Loan Agreement are amended after the date hereof and SG, in its
capacity as a Managing Agent under the Loan Agreement, has agreed to such
amendment in writing, then the parties hereto shall amend, respectively,
Sections 6.01(l), 6.05(a)(i) through (vii), 6.05(n), 6.06(b), 8.01(b), (g) or
(m), as applicable, to conform to the related provision set forth in the Loan
Agreement; and
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(c) If at any time prior to the effectiveness of any amendment to
this Agreement which the parties have agreed to make pursuant to paragraph (a)
or (b) above, a Termination Event shall occur which would not have occurred if
such amendment had been effective, such Termination Event is hereby waived by
the Administrative Agent, each Funding Agent and each Purchaser until such
amendment is effective.
ARTICLE VII
INDEMNIFICATION; EXPENSES; RELATED MATTERS
SECTION 7.01. Indemnities. (a) Without limiting any other rights
which the Administrative Agent, the Funding Agents, or the Purchasers may have
hereunder or under applicable law, the Seller hereby agrees to indemnify the
Purchasers, the Administrative Agent, the Funding Agents, the Program Support
Providers and any of their successors and permitted assigns and any of their
respective directors, officers, employees and agents (collectively, the
"Indemnified Parties") from and against any and all Losses awarded against or
incurred by any of them (excluding, however, (i) Losses to the extent resulting
from gross negligence, willful misconduct, bad faith or reckless disregard of
any obligation or duty on the part of an Indemnified Party and (ii) Losses
specifically excluded from coverage under Sections 4.03 and 7.02 hereof) to the
extent caused by:
(i) reliance on any representation or warranty made or
deemed made by the Seller or the Servicer or any officers of the
Seller or the Servicer under or in connection with this
Agreement, any Principal Agreement, any Monthly Statement, any
Officer's Certificate or any other statement, certificate,
information or report delivered by the Seller pursuant hereto or
thereto, which shall have been false or incorrect when made or
deemed made or delivered; provided, however, that the foregoing
shall exclude any representation or warranty with respect to
which the sole remedy for the breach thereof is the repurchase or
substitution of the Mortgage Loans which are the subject of such
representation or warranty; or
(ii) the failure by the Seller or the Servicer to comply
with any term, provision or covenant contained in this Agreement
or any other Principal Agreement to which it is a party; or
(iii) any commingling of Collections with respect to the
Mortgage Loans with funds of the Seller or the Servicer; or
(iv) any setoff, rescission, counterclaim, or dispute by
or of any Approved Takeout Investor to the payment of the
Anticipated Takeout Amount with respect to any Mortgage Loan
(unless such setoff, rescission, counterclaim or dispute arises
from the Administrative Agent's failure to deliver any Mortgage
Loan against the receipt by the Administrative Agent of an amount
equal to the Anticipated Takeout Amount therefor); or
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(v) any claim made by any Approved Takeout Investor
against the Administrative Agent, any Funding Agent or any
Purchaser in connection with any Sale Agreement, Takeout
Commitment or Takeout Assignment (unless such claim arises from
the Administrative Agent's failure to deliver any Mortgage Loan
against the receipt by the Administrative Agent of an amount
equal to the Anticipated Takeout Amount therefor).
(b) The provisions of this Section 7.01 shall run directly to and
be enforceable by an injured party subject to the limitations hereof, and the
obligations of the Seller under this Section 7.01 shall survive the termination
of this Agreement.
SECTION 7.02. Indemnity for Taxes, Reserves and Expenses. (a) If
after the date hereof, the adoption of any law or bank regulatory guideline or
any amendment or change in the interpretation of any existing or future law or
bank regulatory guideline by any Governmental Authority charged with the
administration, interpretation or application thereof, or the compliance with
any directive of any Governmental Authority (in the case of any bank regulatory
guideline, whether or not having the force of law):
(i) shall subject any Indemnified Party to any tax, duty
or other charge (other than Excluded Taxes) with respect to this
Agreement, the other Principal Agreements, the ownership,
maintenance or financing of any interest in the Net Investment,
the Mortgage Loans or payments of amounts due hereunder, or shall
change the basis of taxation of payments to any Indemnified Party
of amounts payable in respect of this Agreement, the other
Principal Agreements, the ownership, maintenance or financing of
any interest in the Net Investment, the Mortgage Loans or
payments of amounts due hereunder or its obligation to advance
funds hereunder, under a Liquidity Provider Agreement or a
Program Support Agreement (except for changes in the rate of
general corporate, franchise, net income or other income tax
imposed on such Indemnified Party by the jurisdiction in which
such Indemnified Party's principal executive office is located);
or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without
limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System) against assets of,
deposits with or for the account of, or credit extended by, any
Indemnified Party or shall impose on any Indemnified Party or on
the United States market for certificates of deposit or the
London interbank market any other condition affecting this
Agreement, the other Principal Agreements, the ownership,
maintenance or financing of any interest in the Net Investment,
the Mortgage Loans or payments of amounts due hereunder or its
obligation to advance funds hereunder under a Liquidity Provider
Agreement or Program Support Agreement;
and the result of any of the foregoing is to increase the cost to such
Indemnified Party with respect to this Agreement, the other Principal
Agreements, the ownership, maintenance or financing of any interest in the Net
Investment, the Mortgage Loans or the obligations hereunder,
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the funding of the purchase or any increases hereunder, a Liquidity Provider
Agreement or a Program Support Agreement, by an amount reasonably deemed by such
Indemnified Party to be material, then, within 15 days after demand by such
Indemnified Party, the Seller shall pay to such Indemnified Party such
additional amount or amounts as will compensate such Indemnified Party for such
increased cost or reduction.
(b) If any Indemnified Party shall have determined that after the
date hereof, (i) an Accounting Based Consolidation Event or (ii) the adoption of
any applicable law or bank regulatory guideline regarding capital adequacy, or
any change therein, or any change in the interpretation thereof by any
Governmental Authority, or any directive regarding capital adequacy (in the case
of any bank regulatory guideline, whether or not having the force of law) of any
such Governmental Authority, to the extent such change is not an Accounting
Based Consolidation Event, in either case, has or would have the effect of
reducing the rate of return on capital of such Indemnified Party (or its parent)
as a consequence of such Indemnified Party's obligations hereunder or with
respect hereto a level below that which such Indemnified Party (or its parent)
could have achieved but for such Accounting Based Consolidation Event, adoption,
change, request or directive (taking into consideration its policies with
respect to capital adequacy) by an amount reasonably deemed by such Indemnified
Party to be material, then, within 15 days after demand by such Indemnified
Party, the Seller shall pay to such Indemnified Party, such additional amount or
amounts as will compensate such Indemnified Party (or its parent) for such
reduction, such compensation to be paid in the case of any Accounting Based
Consolidation Event, such compensation to be in the form of a fee payable with
respect to the Yield for such Purchaser Group; provided, that the Yield for such
Purchaser Group payable on the next Remittance Date is determined in accordance
with clause (i) of the definition of "Applicable Rate" and to the extent that
the sum of such Yield and such fee does not exceed the Yield for such Purchaser
Group that would be paid on such Remittance Date if such Yield was calculated in
accordance with clause (ii) or the definition of "Applicable Rate" from and
after the date of the occurrence of such Accounting Based Consolidation Event.
(c) Each Indemnified Party agrees to give notice to Seller
promptly upon becoming aware of the occurrence of any event or circumstance
which would give rise to a claim under this Section 7.02 (a) or (b) and in any
event within 30 days after the occurrence thereof; provided that the failure to
give such notice within such time period shall not affect such Indemnified
Party's rights to make a demand hereunder.
(d) The Seller shall compensate each Purchaser, upon the written
request of the Related Funding Agent, for all reasonable out-of-pocket losses,
costs and expenses, including, without limitation, any loss (net of reinvestment
income received in the reemployment of such funds in the manner determined by
such Purchaser in the exercise of its reasonable discretion), reasonable cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Purchaser (or its Liquidity Providers) to make,
fund or maintain its portion of the Net Investment hereunder (or in the case of
clause (ii) below, the inability of a Conduit Purchaser to repay its Commercial
Paper issued in connection with such Net Investment on the related Settlement
Date), (i) if for any reason the Seller fails to sell the Mortgage Loans
described in an Initial Purchase Date Notice on the Purchase Date specified
therefor (other than the failure of a Purchaser to purchase if all conditions
precedent to such purchase have been
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met), (ii) if for any reason any payment of the portion of the Net Investment
funded in connection with the purchase of Mortgage Loans occurs on a date other
than the Settlement Date specified in the applicable Purchase Date Notice or
(iii) if at any time a Conduit Purchaser decides to fund its portion of the Net
Investment pursuant to a Liquidity Provider Agreement. Any request for
compensation under this Section 7.02(d) shall be accompanied by a copy of a
statement from the Related Funding Agent setting forth in reasonable detail the
basis for requesting compensation, and the determination of the amount thereof
in such statement shall be rebuttably presumptive evidence of such amount of
compensation.
(e) Each Indemnified Party (through its respective Funding Agent)
will promptly notify the Administrative Agent and/or the Seller upon learning
that amounts for which it is entitled to seek reimbursement under this Section
7.02 ("Section 7.02 Costs") have begun to accrue and in any event within 30 days
after the occurrence thereof; provided that the failure to give such notice
within such time period shall not affect such Indemnified Party's rights to make
a demand hereunder. A notice by the Administrative Agent or the applicable
Indemnified Party claiming compensation under this Section 7.02 and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount, the
Administrative Agent or any applicable Indemnified Party may use any reasonable
averaging and attributing methods. Each of the Indemnified Parties further
agrees to take such steps as may be reasonably available to it to avoid the need
for, or reduce the amount of, any such amounts that may thereafter accrue under
this Section 7.02; provided, however, that the Indemnified Parties shall have no
obligation to take any such step that is inconsistent with its internal policy
or legal and regulatory restrictions.
SECTION 7.03. Taxes.
(a) Any and all payments to the Funding Agents for the benefit of
the Purchasers with respect to the Net Investment shall be made, in accordance
herewith, free and clear of and without deduction for any present or future
income, excise, stamp or franchise taxes and any other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority on any recipient (or any assignee of such parties) (such non-excluded
items being called "Taxes"), but excluding franchise taxes and taxes imposed on
or measured by the recipient's net income or gross receipts (but not including
any such tax in the nature of a withholding tax) by the jurisdiction under the
laws of which such Purchaser is organized or has its applicable lending office
or any political subdivision of any thereof ("Excluded Taxes"). If the Seller
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder with respect to any Purchaser, (i) the Seller shall pay such
Purchaser within 15 days after demand therefor, an amount sufficient so that,
after making all required deductions (including deductions applicable to
additional sums payable under this Section 7.03), such Purchaser receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Seller shall make such deductions and (iii) the Seller shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law. The Purchasers further agree to take such steps
as may be reasonably available to it to avoid the need for, or reduce the amount
of, any such amounts that may thereafter accrue under this Section 7.03;
provided, however, that the Purchasers shall have no obligation to take any such
step that is inconsistent with its internal policy or legal and regulatory
restrictions.
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(b) If as a result of any event or circumstances similar to those
described in subsection (a) above, any Conduit Purchaser is required to
compensate a Liquidity Provider or Program Support Provider in connection with
borrowings under the Liquidity Provider Agreement or Program Support Agreement,
respectively, by such Conduit Purchaser for the funding or maintenance of such
Purchaser's Net Investment hereunder, then within ten (10) days after demand by
the Funding Agent for the account of such Conduit Purchaser, the Seller shall
pay such Conduit Purchaser within 15 days after demand therefor, such additional
amount or amounts as may be necessary to pay such Liquidity Provider or Program
Support Provider, as applicable the amounts due or to otherwise reimburse such
Conduit Purchaser for amounts paid by it. Such Conduit Purchaser agrees to use
its best efforts to enforce the provisions of the Liquidity Provider Agreement
or Program Support Agreement, as applicable, which require each Liquidity
Provider or Program Support Provider, as applicable, to take certain actions to
reduce the amount of such compensation due to such Liquidity Provider or Program
Support Provider.
SECTION 7.04. Other Costs, Expenses and Related Matters.
(a) The Seller agrees, upon receipt of a written invoice, to pay
or cause to be paid, and to save the Conduit Purchasers, the Committed
Purchasers, the Funding Agents and the Administrative Agent harmless against
liability for the payment of, all reasonable out-of-pocket expenses (including,
without limitation, attorneys', accountants' and other third parties' fees and
expenses, any filing fees and expenses incurred by officers or employees of the
Conduit Purchasers, Committed Purchasers, Funding Agents and/or Administrative
Agent) or intangible, documentary or recording taxes incurred by or on behalf of
the Conduit Purchasers, Committed Purchasers, Funding Agents and Administrative
Agent (i) in connection with the negotiation, execution, delivery and
preparation of this Agreement, the other Principal Agreements and any documents
or instruments delivered pursuant hereto and thereto and the transactions
contemplated hereby or thereby and (ii) from time to time (A) relating to any
amendments, waivers or consents under this Agreement and the other Principal
Agreements, (B) relating to the syndication of the facility contemplated hereby,
(C) arising in connection with any Conduit Purchaser's, any Committed
Purchaser's, any Funding Agent's or the Administrative Agent's enforcement or
preservation of rights, or (D) arising in connection with any audit, dispute,
disagreement, litigation or preparation for litigation involving this Agreement
or any of the other Principal Agreements.
(b) In addition, the Seller shall pay any and all stamp, sales,
excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement
or the other agreements and documents to be delivered hereunder, and agrees to
indemnify the Indemnified Parties against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.
ARTICLE VIII
TERMINATION EVENTS
SECTION 8.01. Termination Events. Each of the following events
shall, upon the occurrence and continuance thereof, be a "Termination Event":
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(a) The Seller shall fail to make any payment, transfer or
deposit as required to be made hereunder, under the Fee Letter or under any
other Principal Agreement when due and such failure shall remain unremedied for
a period of five (5) calendar days after the due date; or
(b) Any representation or warranty made or deemed to be made by
the Seller or any Performance Guarantor or any of their respective officers
under or in connection with this Agreement or any other Principal Agreement or
other information or report delivered pursuant hereto or thereto shall prove to
have been false, misleading or incorrect in any material respect when made;
provided that any breach of a representation and warranty in Section 6.02 with
respect to a Mortgage Loan as of the related Purchase Date shall not constitute
a Termination Event if the Seller complies with its repurchase obligation set
forth in Section 2.04(c) with respect to such Mortgage Loan; or
(c) The Seller or any Performance Guarantor shall fail to perform
or observe any other material term, covenant or agreement contained in this
Agreement or any other Principal Agreement (other than as referred to in Section
8.01(a)) on its part to be performed or observed and any such failure shall
remain unremedied beyond the expiration of any applicable grace or notice period
expressly provided for therein; or
(d) The Seller, Servicer or any Performance Guarantor generally
shall not pay its debts as they become due or shall admit in writing its
inability to pay its debts, or shall make a general assignment for the benefit
of creditors; or
(e) The Seller, Servicer or any Performance Guarantor shall (i)
apply for or consent to the appointment of a receiver, trustee, custodian,
intervenor or liquidator of it or of all or a substantial part of its assets;
(ii) file a voluntary petition in bankruptcy, (iii) file a petition or answer
seeking reorganization or an arrangement with creditors or to take advantage of
any Debtor Laws, (iv) file an answer admitting the allegations of or consent to,
or default in answering, a petition filed against it in any bankruptcy,
reorganization, or insolvency proceeding, or (v) take action for the purpose of
effecting any of the foregoing; or
(f) An involuntary petition or complaint shall be filed against
the Seller, the Servicer, or any Performance Guarantor seeking bankruptcy or
reorganization of the Seller, the Servicer, or any Performance Guarantor or a
receiver, custodian, trustee, intervenor or liquidator shall be appointed for
all or substantially all of the assets of either the Seller, the Servicer or any
Performance Guarantor; or an order, order for relief, judgment or decree shall
be entered by any court of competent jurisdiction or other competent authority
approving a petition or complaint seeking reorganization of the Seller, the
Servicer or any Performance Guarantor or appointing a receiver, custodian,
trustee, intervenor or liquidator of the Seller, the Servicer or any Performance
Guarantor or of all or substantially all of the assets of the Seller, the
Servicer or any Performance Guarantor; or
(g) (i) The Seller, the Servicer or any Performance Guarantor
shall fail to make when due and payable or within any applicable grace period
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) any payment on any Indebtedness with an unpaid principal balance of
over $1,500,000 with respect to the Seller or the Servicer, or
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$10,000,000 in the case of either Performance Guarantor; or (ii) any event or
condition occurs under any provision contained in any such obligation or any
agreement securing or relating to such obligation (or any other breach or
default under such obligation or agreement occurs) if the effect thereof is to
cause or permit with the giving of notice or lapse of time or both the holder or
trustee of such obligation to cause such obligation to become due prior to its
stated maturity; or (iii) any such obligation becomes due (other than by
regularly scheduled payments) prior to its stated maturity; or (iv) any of the
foregoing occurs with respect to any one or more items of Indebtedness with an
unpaid principal balance exceeding, in the aggregate, $1,500,000 with respect to
the Seller or the Servicer, or $10,000,000 in the case of either Performance
Guarantor; or
(h) The Seller, Servicer or any Performance Guarantor shall fail
within 30 days to timely appeal any final judgments or to pay, bond or otherwise
discharge any judgments or orders for payment of money in each case in excess of
$5,000,000, individually or in the aggregate; or
(i) Any Person shall levy on, seize or attach all or any material
portion of the assets of the Seller, the Servicer or any Performance Guarantor
and within thirty (30) days thereafter the Seller, the Servicer or the
Performance Guarantor shall not have dissolved such levy or attachment, as the
case may be, and, if applicable, regained possession of such seized assets; or
(j) The Seller or the Servicer becomes ineligible to originate,
sell or service mortgage loans to FNMA, FHLMC or GNMA, or FNMA, FHLMC or GNMA
shall impose any sanctions upon or terminate or revoke any rights of the Seller
or the Servicer; or
(k) If (i) any Governmental Authority cancels the Seller's right
to be either a seller or servicer of such Governmental Authority's insured or
guaranteed mortgage loans or mortgage-backed securities, (ii) any Approved
Takeout Investor cancels for cause any servicing or underwriting agreement
between the Seller and such Approved Takeout Investor that could reasonably be
expected to have a Material Adverse Effect or (iii) the Seller receives notice
from a Governmental Authority that such Governmental Authority intends to revoke
such Seller's right to be a seller or servicer of such Governmental Authority's
insured or guaranteed mortgage loans or mortgage-backed securities and such
notice is not withdrawn within ten (10) days of the receipt thereof; or
(l) Any material provision of this Agreement, or any other
Principal Agreement shall for any reason cease to be in full force and effect,
or be declared null and void or unenforceable in whole or in part; or the
validity or enforceability of any such document shall be challenged or denied;
or
(m) A "change in control," with respect to the ownership of AHMIC
shall have occurred after the date hereof (and as used in this subparagraph, the
term "change in control" shall mean an acquisition by any Person, partnership or
group, as defined under the Securities Exchange Act of 1934, as amended, of a
direct or indirect beneficial ownership of 10% or more
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of the then-outstanding voting stock of the Performance Guarantors); or AHMIC
shall cease at any time to own directly or indirectly 100% of the stock of the
Seller and the Servicer; or
(n) Any purchase hereunder of Mortgage Loans and the other
Collateral with respect thereto shall for any reason cease to constitute valid
and perfected ownership of such Mortgage Loans and other Collateral in the
Administrative Agent, for the benefit of the Purchasers, free and clear of any
Lien; or
(o) Any action or omission to act by the Seller which constitutes
gross negligence or willful misconduct causes a Takeout Failure, such Takeout
Failure shall continue unremedied after the Cure Date and such occurrence has a
Material Adverse Effect; or
(p) A Takeout Deficiency Fee exists for any Mortgage Loan and
either (i) a demand has been made by the Administrative Agent pursuant to
Section 2.05 for the payment of such Takeout Deficiency Fee and it has not paid
within five (5) calendar days after it is due, or (ii) such Takeout Deficiency
Fee cannot be paid pursuant to the proviso of Section 2.05; or
(q) As of the end of any calendar month, the average of the
Fall-Out Rates for such month and the two preceding months exceeds 7.0%; or
(r) The Seller fails to obtain and deliver to the Custodian, the
Custodial Files, and the Administrative Agent shall determine that the
continuation of such condition could be reasonably expected to have a Material
Adverse Effect on the Administrative Agent or the Purchaser; or
(s) There shall have occurred any event that could be reasonably
expected to have a Material Adverse Effect on the enforceability or
collectability of any significant portion of the Mortgage Loans or the Takeout
Commitments or there shall have occurred any other event that could be
reasonably expected to have a Material Adverse Effect on the ability of the
Seller, the Servicer or the Administrative Agent to collect a significant
portion of Mortgage Loans or Takeout Commitments or the ability of the Seller or
the Servicer to perform hereunder or a Material Adverse Effect has occurred in
the financial condition or business of the Seller or the Servicer since June 30,
2006; or
(t) (i) Any litigation (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings not disclosed in
writing by the Seller to the Purchasers, the Administrative Agent and the
Funding Agents prior to the date of execution and delivery of this Agreement is
pending against the Seller or any Affiliate thereof, or (ii) any development not
so disclosed has occurred in any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental proceedings so
disclosed, which, in the case of either clause (i) and/or clause (ii), in the
reasonable opinion of the Required Funding Agents, could reasonably be expected
to have a Material Adverse effect or impair the ability of the Seller, the
Servicer or any Performance guarantor to perform its obligations under this
Agreement or any other Principal Agreement; or
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(u) The Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Code with regard to any of the assets of the
Seller or the Servicer and such lien shall not have been released within 30
days, or the PBGC shall, or shall indicate its intention to, file notice of a
lien pursuant to Section 4068 of ERISA with regard to any of the assets of the
Seller or the Servicer; or
(v) A successor Custodian shall not have been appointed and
accepted such appointment within 180 days after the retiring Custodian shall
have given written notice of resignation pursuant to Section 4.4 of the
Custodial Agreement; or
(w) The Administrative Agent shall fail or cease to have a valid
and perfected first priority ownership interest in the Mortgage Loans and the
other Collateral for the benefit of the Purchasers; or
(x) As of any date, the aggregate outstanding balance of all the
Mortgage Loans which are Wet Loans and subject to this Agreement as of such date
exceeds 10% of the Maximum Purchase Limit as of such date; or
(y) As of any date, (i) the aggregate outstanding balance of all
the Mortgage Loans subject to this Agreement as of such date and which were
originated more than 90 days prior to such date exceeds 15% of the Maximum
Purchase Limit as of such date; or (ii) the aggregate outstanding balance of all
Mortgage Loans subject to this Agreement as of such date and which have been
subject to this Agreement for more than 60 days exceeds 15% of the Maximum
Purchase Limit, or (iii) any Mortgage Loan as of such date has been subject to
this Agreement for more than 180 days, and in each case such failure shall
remain unremedied for five (5) Business Days; or
(z) The Tangible Net Worth of AHMIC shall be less than
$685,000,000 plus 75% of the Net Cash Proceeds of any capital stock (including
preferred stock) issued by AHMIC after June 30, 2005, at any time; or
(aa) The Tangible Net Worth of AHMS shall be less than
$30,000,000 at any time; or
(bb) The Tangible Net Worth of AHM shall be less than $21,000,000
at any time; or
(cc) AHMIC's net income shall be less than $1.00 for any period
of two consecutive fiscal quarters; or
(dd) AHMIC's ratio of its Aggregate Collateral Value to its
Adjusted Consolidated Funded Debt shall be less than 1.00 to 1.00; or
(ee) A Servicer Termination Event shall have occurred or have
been deemed to have occurred; or
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(ff) At any time, the aggregate outstanding balance of all
Mortgage Loans which have been subject to this Agreement since the date hereof
and which have become Fall-Out Loans shall exceed 20% of the aggregate Purchase
Prices for all purchases outstanding at such time for more than five (5)
Business Days; or
(gg) A Mortgage Loan is released to the Servicer pursuant to
Section 3.4 of the Custodial Agreement and not returned in within 14 calendar
days after such release;
and in any such event, the Administrative Agent shall, at the request, or may,
with the consent, of the Required Funding Agents, by notice to the Seller
declare the Termination Date to have occurred, except that, in the case of any
event described in subsections (d), (e) or (f) above, the Termination Date shall
be deemed to have occurred automatically upon the occurrence of such event;
provided, however, that if any involuntary proceeding (as described in
subsection (f) above) is dismissed within sixty (60) days after its
commencement, and if no other Termination Event has occurred, then following
such dismissal, the program shall be reinstated as if the Termination Date had
not occurred (it being understood that the Seller and the Servicer shall
continue to perform all of their respective obligations hereunder during such
sixty-day period and following any such Termination Date).
SECTION 8.02. Waiver of Past Defaults. The Administrative Agent,
with the prior written consent of the Funding Agents, may, on behalf of the
Purchasers, waive in writing any default by the Seller, the Servicer or
Successor Servicer in the performance of their respective obligations hereunder
and its consequences. Upon any such waiver of a past default, such default shall
cease to exist, and any default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
ARTICLE IX
THE ADMINISTRATIVE AGENT; FUNDING AGENTS
SECTION 9.01. Authorization and Action of Administrative Agent.
(a) Each Conduit Purchaser and each Committed Purchaser hereby
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other
Principal Agreements as are delegated to the Administrative Agent by the terms
hereof and thereof, together with such powers as are reasonably incidental
thereto. In furtherance, and without limiting the generality, of the foregoing,
each Conduit Purchaser and each Committed Purchaser hereby appoints the
Administrative Agent as its agent to execute and deliver all further instruments
and documents, and agrees to take all further action that the Administrative
Agent may deem necessary or appropriate or that a Conduit Purchaser or a
Committed Purchaser may reasonably request in order to perfect, protect or more
fully evidence the interests transferred or to be transferred from time to time
by the Seller hereunder, or to enable any of them to exercise or enforce any of
their respective rights hereunder. With respect to actions which are incidental
to the actions specifically delegated to the Administrative Agent hereunder, the
Administrative Agent shall not be required to take any such incidental action
hereunder, but shall be required to act or to refrain
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from acting (and shall be fully protected in acting or refraining from acting)
upon the direction of the Funding Agents; provided, however, the Administrative
Agent shall not be required to take any action hereunder if the taking of such
action, in the reasonable determination of the Administrative Agent, shall be in
violation of any applicable law, rule or regulation or contrary to any provision
of this Agreement or shall expose the Administrative Agent to liability
hereunder or otherwise. Upon the occurrence and during the continuance of any
Termination Event, the Administrative Agent shall take no action hereunder
(other than ministerial actions or such actions as are specifically provided for
herein) without the prior consent of the Funding Agents. In the event the
Administrative Agent requests (with confirmation of receipt) a Conduit
Purchaser's or a Committed Purchaser's consent pursuant to the foregoing
provisions and the Administrative Agent does not receive a response to such
request (either positive or negative) from such Conduit Purchaser or such
Committed Purchaser within ten (10) Business Days of Conduit Purchaser's or
Committed Purchaser's receipt of such request, then such Conduit Purchaser or
such Committed Purchaser (and its percentage interest hereunder) shall be
disregarded in determining whether the Administrative Agent shall have obtained
sufficient consent hereunder.
(b) The Administrative Agent shall exercise such rights and
powers vested in it by this Agreement and the other Principal Agreements, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
SECTION 9.02. Administrative Agent's Reliance, Etc. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable to any Person for any action taken or omitted to be taken by it
or them as Administrative Agent under or in connection with this Agreement or
any of the other Principal Agreements, except for its or their own gross
negligence or willful misconduct. Without limiting the foregoing, the
Administrative Agent: (i) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (ii) makes no warranty or
representation to any Conduit Purchaser or any Committed Purchaser and shall not
be responsible to any Conduit Purchaser or any Committed Purchaser for any
statements, warranties or representations made in or in connection with this
Agreement; (iii) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or any of the other Principal Agreements on the part of the Seller or
Servicer or to inspect the property (including the books and records) of the
Seller or Servicer; (iv) shall not be responsible to any Conduit Purchaser or
any Committed Purchaser for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any of the
other Principal Agreements or any other instrument or document furnished
pursuant hereto or thereto; and (v) shall incur no liability under or in respect
of this Agreement or any of the other Principal Agreements by acting upon any
notice (including notice by telephone), consent, certificate or other instrument
or writing (which may be by telex) believed by it to be genuine and signed or
sent by the proper party or parties.
SECTION 9.03. Credit Decision. Each Conduit Purchaser and each
Committed Purchaser acknowledges that it has, independently and without reliance
upon the
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Administrative Agent, any of the Administrative Agent's Affiliates, any Funding
Agent, any other Committed Purchaser or any other Conduit Purchaser and based
upon such documents and information as it has deemed appropriate, made its own
evaluation and decision to enter into this Agreement and the other Principal
Agreements to which it is a party and, if it so determines, to accept the
transfer of any interest in the assets purchased hereunder. Each Conduit
Purchaser and each Committed Purchaser also acknowledges that it will,
independently and without reliance upon the Administrative Agent, any of the
Administrative Agent's Affiliates, any Funding Agent, any other Committed
Purchaser or any other Conduit Purchaser and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
decisions in taking or not taking action under this Agreement and the other
Principal Agreements to which it is a party.
SECTION 9.04. Indemnification of the Administrative Agent. Each
Committed Purchaser agrees to indemnify the Administrative Agent (to the extent
not reimbursed by the Seller), ratably in accordance with its respective
Purchaser Group's Pro Rata Share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Administrative Agent (in its capacity
as such) in any way relating to or arising out of this Agreement and any of the
other Principal Agreements or such action taken or omitted by the Administrative
Agent hereunder or thereunder, provided that such Committed Purchaser shall not
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from the Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Committed Purchaser agrees to reimburse the
Administrative Agent, ratably in accordance with its respective Purchaser
Group's Pro Rata Share, promptly upon demand for any out-of-pocket expenses
(including counsel fees) incurred by the Administrative Agent in connection with
the administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and the other Principal
Agreements, to the extent that such expenses are incurred in the interests of or
otherwise in respect of the Conduit Purchasers or the Committed Purchasers
hereunder and/or thereunder and to the extent that the Administrative Agent is
not reimbursed for such expenses by the Seller in accordance with Section 7.04.
SECTION 9.05. Successor Administrative Agent. The Administrative
Agent may resign at any time, effective upon the appointment and acceptance of a
successor Administrative Agent as provided below, by giving written notice
thereof to each Funding Agent, each Conduit Purchaser, each Committed Purchaser,
the Seller and the Servicer. Upon any such resignation, the Funding Agents shall
appoint a successor Administrative Agent. Each Conduit Purchaser and each
Committed Purchaser agrees that it shall not unreasonably withhold or delay its
approval of the appointment of a successor Administrative Agent. If no such
successor Administrative Agent shall have been so appointed, and shall have
accepted such appointment, within thirty (30) days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Conduit Purchasers and the Committed
Purchasers, appoint a successor Administrative Agent with the prior consent of
the Funding Agents (which such consent will not be unreasonably withheld) which
such successor Administrative Agent shall be either (i) a commercial bank
organized under the laws
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of the United States or of any state thereof and having a combined capital and
surplus of at least $50,000,000 or (ii) an Affiliate of such a bank. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Administrative Agent's resignation hereunder as Administrative
Agent, the provisions of this Article IX shall continue to inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement. The successor Administrative Agent shall promptly
notify the Seller and Servicer of its appointment hereunder.
SECTION 9.06. Payments by the Administrative Agent. Unless
specifically allocated to a Conduit Purchaser or a Committed Purchaser pursuant
to the terms of this Agreement, all amounts received by the Administrative
Agent, if any, on behalf of the Conduit Purchasers or Committed Purchasers shall
be paid by the Administrative Agent to the applicable Funding Agent (at the
account specified in writing to Administrative Agent) in accordance with the
related Purchaser Group's Pro Rata Share on the Business Day received by the
Administrative Agent, unless such amounts are received after 12:00 noon (New
York time) on such Business Day, in which case the Administrative Agent shall
use its reasonable efforts to pay such amounts to such Funding Agent, on behalf
of the related Purchaser, on such Business Day, but, in any event, shall pay
such amounts to such Funding Agent, on behalf of the related Purchaser, not
later than 11:00 a.m. (New York time) on the following Business Day.
SECTION 9.07. Authorization and Action of Funding Agent.
(a) Each Conduit Purchaser and each Committed Purchaser of each
Purchaser Group hereby appoints and authorizes the Funding Agent with respect to
such Purchaser Group to take such action as agent on its behalf and to exercise
such powers under this Agreement and the other Principal Agreements as are
delegated to the Funding Agent by the terms hereof and thereof, together with
such powers as are reasonably incidental thereto. In furtherance, and without
limiting the generality, of the foregoing, each Conduit Purchaser and each
Committed Purchaser hereby appoints the related Funding Agent as its agent to
execute and deliver all further instruments and documents, and agrees to take
all further action that the related Funding Agent may deem necessary or
appropriate or that a Conduit Purchaser or a Committed Purchaser may reasonably
request in order to perfect, protect or more fully evidence the interests
transferred or to be transferred from time to time by the Seller hereunder, or
to enable any of them to exercise or enforce any of their respective rights
hereunder, and such other instruments or notices, as may be necessary or
appropriate for the purposes stated hereinabove. The Conduit Purchasers and
Committed Purchasers may direct the related Funding Agent (i) to direct the
Administrative Agent to take any action which is incidental to the actions
specifically delegated to the Administrative Agent hereunder and (ii) not to
take or to cease taking any action which is incidental to the actions
specifically delegated to the Administrative Agent hereunder. With respect to
actions which are incidental to the actions specifically delegated to a Funding
Agent hereunder, a Funding Agent shall not be required to take any such
incidental action hereunder, but shall be required to act or to refrain from
acting (and shall be fully protected in acting or refraining from acting) upon
the direction of the related Conduit Purchaser and Committed
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Purchaser; provided, however, that no Funding Agent shall be required to take
any action hereunder if the taking of such action, in the reasonable
determination of such Funding Agent, shall be in violation of any applicable
law, rule or regulation or contrary to any provision of this Agreement or shall
expose such Funding Agent to liability hereunder or otherwise. Upon the
occurrence and during the continuance of any Termination Event, the Funding
Agent shall take no action hereunder (other than ministerial actions or such
actions as are specifically provided for herein) without the prior consent of
the related Conduit Purchaser and Committed Purchaser. The Funding Agent shall
not, without the prior written consent of the related Conduit Purchaser (if any
interest is held by a Conduit Purchaser at such time) and Committed Purchaser,
agree to (i) amend, modify or waive any provision of this Agreement in any way
which would (A) reduce or impair Collections or the payment of fees payable
hereunder to the Conduit Purchasers or Committed Purchasers or delay the
scheduled dates for payment of such amounts, (B) modify any provisions of this
Agreement relating to the timing of payments required to be made by the Seller
or the Servicer or the application of the proceeds of such payments, and (C)
permit the appointment of any Person (other than the Administrative Agent) as
Successor Servicer. In addition, each Funding Agent agrees that it shall not
agree to any amendment of this Agreement not specifically described in the two
preceding sentences without the consent of the related Conduit Purchaser and
Committed Purchaser. In the event the Funding Agent requests a Person's consent
pursuant to the foregoing provisions and the Funding Agent does not receive a
response to such request (either positive or negative) from such Person within
ten (10) Business Days of such Person's receipt of such request, then such
Person (and its percentage interest hereunder) shall be disregarded in
determining whether the Funding Agent shall have obtained sufficient consent
hereunder.
(b) The Funding Agent shall exercise such rights and powers
vested in it by this Agreement and the other Principal Agreements, and use the
same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
SECTION 9.08. Funding Agent's Reliance, Etc. Neither any Funding
Agent nor any of its directors, officers, agents or employees shall be liable to
any Person for any action taken or omitted to be taken by it or them as Funding
Agent under or in connection with this Agreement or any of the other Principal
Agreements, except for its or their own gross negligence or willful misconduct.
Without limiting the foregoing, the Funding Agent: (i) may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (ii)
makes no warranty or representation to any Conduit Purchaser or any Committed
Purchaser and shall not be responsible to any Conduit Purchaser or any Committed
Purchaser for any statements, warranties or representations made in or in
connection with this Agreement; (iii) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or any of the other Principal Agreements on the
part of the Seller or the Servicer or to inspect the property (including the
books and records) of the Seller or the Servicer; (iv) shall not be responsible
to any Conduit Purchaser or any Committed Purchaser for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement, the Net Investment or any other instrument or document furnished
pursuant hereto or thereto; and (v)
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shall incur no liability under or in respect of this Agreement or any of the
other Principal Agreements by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be by
telex) believed by it to be genuine and signed or sent by the proper party or
parties.
SECTION 9.09. Credit Decision. Each Conduit Purchaser and each
Committed Purchaser acknowledges that it has, independently and without reliance
upon the Funding Agent, any of the Funding Agent's Affiliates, any other
Committed Purchaser or any other Conduit Purchaser and based upon such documents
and information as it has deemed appropriate, made its own evaluation and
decision to enter into this Agreement and the other Principal Agreements to
which it is a party and, if it so determines, to accept the transfer of any
interest in the assets purchased hereunder. Each Conduit Purchaser and each
Committed Purchaser also acknowledges that it will, independently and without
reliance upon the Funding Agent, any of the Funding Agent's Affiliates, any
other Committed Purchaser or any other Conduit Purchaser and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own decisions in taking or not taking action under this Agreement and
the other Principal Agreements to which it is a party.
SECTION 9.10. Indemnification of the Funding Agent. Each
Committed Purchaser agrees to indemnify the related Funding Agent (to the extent
not reimbursed by the Seller), ratably in accordance with its respective pro
rata share of its portion of the related Purchaser Group Limit, from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against the Funding
Agent (in its capacity as such) in any way relating to or arising out of this
Agreement and any of the other Principal Agreements or such action taken or
omitted by the Funding Agent hereunder or thereunder, provided that such
Committed Purchaser shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from the Funding Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Committed
Purchaser agrees to reimburse the Funding Agent, ratably in accordance with its
respective pro rata share of its portion of the related Purchaser Group Limit,
promptly upon demand for any out-of-pocket expenses (including counsel fees)
incurred by the Funding Agent in connection with the administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and the other Principal Agreements, to
the extent that such expenses are incurred in the interests of or otherwise in
respect of the Conduit Purchasers or the Committed Purchasers hereunder and/or
thereunder and to the extent that the Funding Agent is not reimbursed for such
expenses by the Seller.
SECTION 9.11. Successor Funding Agent. A Funding Agent may resign
at any time, effective upon the appointment and acceptance of a successor
Funding Agent as provided below, by giving written notice thereof to the
Administrative Agent, each Conduit Purchaser, each Committed Purchaser, the
Seller and the Servicer. Upon any such resignation, the members of the related
Purchaser Group acting jointly shall appoint a successor Funding Agent. Each
Conduit Purchaser and each Committed Purchaser agrees that it shall not
unreasonably withhold or delay its approval of the appointment of a successor
Funding Agent. If
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no such successor Funding Agent shall have been so appointed, and shall have
accepted such appointment, within thirty (30) days after the retiring Funding
Agent's giving of notice of resignation, then the retiring Funding Agent may, on
behalf of the Conduit Purchasers and the Committed Purchasers, appoint a
successor Funding Agent which shall be either (i) a commercial bank organized
under the laws of the United States or of any state thereof and having a
combined capital and surplus of at least $50,000,000 or (ii) an Affiliate of
such a bank. Upon the acceptance of any appointment as Funding Agent hereunder
by a successor Funding Agent, such successor Funding Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Funding Agent, and the retiring Funding Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Funding Agent's resignation hereunder as Funding Agent, the provisions
of this Article VII shall continue to inure to its benefit as to any actions
taken or omitted to be taken by it while it was Funding Agent under this
Agreement. The successor Funding Agent shall promptly notify the Seller and the
Servicer of its appointment hereunder.
SECTION 9.12. Payments by a Funding Agent. Unless specifically
allocated to a Conduit Purchaser or a Committed Purchaser pursuant to the terms
of this Agreement, all amounts received by a Funding Agent on behalf of the
related Conduit Purchaser or Committed Purchaser shall be paid by such Funding
Agent to such Conduit Purchaser or Committed Purchaser, as applicable (at the
account specified in writing to such Funding Agent) in accordance with such
Purchaser's pro rata share of such amount received on the Business Day received
by such Funding Agent, unless such amounts are received after 12:00 noon (New
York time) on such Business Day, in which case such Funding Agent shall use its
reasonable efforts to pay such amounts, on such Business Day, but, in any event,
shall pay such amounts not later than 11:00 a.m. (New York time) the following
Business Day.
ARTICLE X
ASSIGNMENTS AND PARTICIPATIONS
SECTION 10.01. Assignments; Additional Purchaser Groups.
(a) Each Conduit Purchaser may, from time to time, with prior or
concurrent notice to the Seller and the Servicer, in one transaction or a series
of transactions, assign to an Eligible Assignee all or a portion of the related
Purchaser Group's Pro Rata Share of the Net Investment and such Conduit
Purchaser's rights and obligations under this Agreement and any other Principal
Agreements to which it is a party. Upon and to the extent of such assignment by
a Conduit Purchaser to an Eligible Assignee, (i) such Eligible Assignee shall be
the owner of the assigned portion of the related Purchaser Group's Pro Rata
Share of the Net Investment, (ii) the related Funding Agent for such Conduit
Purchaser will act as the Funding Agent for such Eligible Assignee, with all
corresponding rights and powers, express or implied, granted to the related
Funding Agent hereunder or under the other Principal Agreements, (iii) such
Eligible Assignee and its Liquidity Providers and Program Support Providers and
other related parties shall have the benefit of all the rights and protections
provided to such Conduit Purchaser and its Liquidity Providers and Program
Support Providers and other related parties, respectively, herein and in the
other Principal Agreements (including, without limitation, any limitation on
recourse against such Conduit Purchaser or related parties, any agreement not to
file or join in the filing of
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a petition to commence an insolvency proceeding against such Conduit Purchaser,
and the right to assign to another Eligible Assignee as provided in this
paragraph), (iv) such Eligible Assignee shall assume such Conduit Purchaser's
right to fund the assigned portion of the related Purchaser Group's Pro Rata
Share of any Purchase Prices requested by the Seller subsequent to the date of
such assignment and all other rights and obligations, if any, of such Conduit
Purchaser under and in connection with this Agreement or any other Principal
Agreements, and such Conduit Purchaser shall be released from such obligations,
in each case to the extent of such assignment, and the obligations of such
Conduit Purchaser and Eligible Assignee shall be several and not joint, (v) all
distributions in respect of the related Purchaser Group's Pro Rata Share of the
Net Investment shall be made to the applicable Funding Agent, on behalf of such
Conduit Purchaser and such Eligible Assignee on a pro rata basis according to
their respective interests, (vi) if applicable, the definition of the term
"Applicable Rate" with respect to the portion of the related Purchaser Group's
Pro Rata Share of the Net Investment funded with Commercial Paper issued by such
Conduit Purchaser from time to time shall be determined in the manner set forth
in the definition of "CP Rate" applicable to such Conduit Purchaser on the basis
of the interest rate or discount applicable to Commercial Paper issued by such
Eligible Assignee (rather than such Conduit Purchaser), (vii) the defined terms
and other terms and provisions of this Agreement and the other Principal
Agreements shall be interpreted in accordance with the foregoing, and (viii) if
requested by the applicable Funding Agent, the parties will execute and deliver
such further agreements and documents and take such other actions as such
Funding Agent may reasonably request to evidence and give effect to the
foregoing. No assignment by a Conduit Purchaser to an Eligible Assignee of all
or any portion of the related Purchaser Group's Pro Rata Share of the Net
Investment shall in any way diminish the related Committed Purchaser's
obligation under Section 10.01(a) to fund any Purchase Price not funded by such
Conduit Purchaser or Eligible Assignee.
(b) Each Committed Purchaser may assign all or a portion of its
interests in the Net Investment and its rights and obligations hereunder to any
Eligible Assignee. In the case of an assignment by a Committed Purchaser (or
assignee thereof) to another Person, the assignor shall deliver to the
assignee(s) an Assignment and Assumption Agreement, duly executed, assigning to
the assignee a pro rata interest in the Net Investment and the assignor's rights
and obligations hereunder. Any assignor hereunder shall promptly execute and
deliver all further instruments and documents required hereby, and take all
further action, that the assignee may reasonably request, in order to protect or
more fully evidence the assignee's right, title and interest in and to such
interest and to enable the Administrative Agent, on behalf of such assignee, to
exercise or enforce any rights hereunder and under the other Principal
Agreements to which such assignor is or, immediately prior to such assignment,
was a party. Upon any assignment hereunder, (i) the assignee shall have all of
the rights and obligations of the assignor hereunder and under the other
Principal Agreements to which such assignor is or, immediately prior to such
assignment, was a party with respect to such interest for all purposes of this
Agreement and such other Principal Agreements (it being understood that the
Committed Purchasers (or assignees thereof), as assignees, shall be obligated to
fund Purchase Prices under Section 2.01 in accordance with the terms thereof,
notwithstanding that the Conduit Purchasers were not so obligated), and (ii) the
assignor shall relinquish its rights with respect to such interest for all
purposes of this Agreement and under the other Principal Agreements to which
such
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assignor is or, immediately prior to such assignment, was a party. No such
assignment shall be effective unless a fully executed copy of the related
Assignment and Assumption Agreement shall be delivered to the Administrative
Agent and the Seller. All out-of-pocket costs and legal expenses of the
Administrative Agent, the assignor and the assignee incurred in connection with
any assignment hereunder shall be borne as agreed among the Seller, such
assignor and such assignee.
(c) By executing and delivering an Assignment and Assumption
Agreement, the assignor and assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Assumption Agreement, the assignor makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, the
other Principal Agreements or any other instrument or document furnished
pursuant hereto or thereto or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, the other Principal
Agreements, the Mortgage Loans or any such other instrument or document; (ii)
the assignor makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Seller or the Servicer or the
performance or observance by the Seller or the Servicer of any of their
respective obligations under this Agreement, the other Principal Agreements or
any other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement and such other
instruments, documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Assumption
Agreement and to purchase such interest; (iv) such assignee will, independently
and without reliance upon the Administrative Agent or any of its Affiliates, the
Funding Agents or any of their Affiliates, the assignor or any other Purchaser
and based on such agreements, documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Principal Agreements; (v)
such assignee appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement,
the other Principal Agreements and any other instrument or document furnished
pursuant hereto or thereto as are delegated to the Administrative Agent by the
terms hereof or thereof, together with such powers as are reasonably incidental
thereto and to enforce its respective rights and interests in and under this
Agreement, the other Principal Agreements and the assets purchased hereunder;
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement and the other
Principal Agreements are required to be performed by it as such assignee; and
(vii) such assignee agrees that it will not institute against any Conduit
Purchaser any proceeding of the type referred to in Section 11.15 prior to the
date which is one year and one day after the payment in full of all Commercial
Paper issued by any Conduit Purchaser.
(d) Upon the Seller's request, an additional Purchaser Group may
be added to this Agreement at any time by the execution and delivery of a
Joinder Agreement by the members of such proposed additional Purchaser Group,
the Seller, the Servicer and the Administrative Agent, which execution and
delivery shall not be unreasonably refused by such parties. Upon the effective
date of such Joinder Agreement, (i) each Person specified therein as a "Conduit
Purchaser" shall become a party hereto as a Conduit Purchaser, entitled to the
rights and subject
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to the obligations of a Conduit Purchaser hereunder, (ii) each Person specified
therein as a "Committed Purchaser" shall become a party hereto as a Committed
Purchaser, entitled to the rights and subject to the obligations of a Committed
Purchaser hereunder, (iii) each Person specified therein as a "Funding Agent"
shall become a party hereto as a Funding Agent, entitled to the rights and
subject to the obligations of a Funding Agent hereunder, (iv) the Maximum
Purchase Limit shall be increased by an amount equal to the aggregate
Commitments of the Committed Purchasers party to such Joinder Agreement, and (v)
appropriate assignments shall be executed among the Purchaser Groups such that,
after giving effect to the addition of the new Purchaser Group, each Purchaser
Group shall have funded its Pro Rata Share of the Net Investment. On or prior to
the effective date of such Joinder Agreement, the Seller, the new Conduit
Purchaser and the new Funding Agent shall enter into a fee letter with the
Administrative Agent, the Servicer and the Seller for purposes of setting forth
the fees payable to the members of such Purchaser Group in connection with this
Agreement, which fee letter shall be considered a "Fee Letter" for all purposes
of this Agreement.
SECTION 10.02. Participations.
(a) Any Purchaser may sell participations to one or more Persons
in or to all or a portion of its rights and obligations hereunder; provided,
however, that (i) such Purchaser's obligations under this Agreement (including,
without limitation, any Committed Purchaser's commitment to fund its portion of
any Purchase Price hereunder) shall remain unchanged, (ii) such Purchaser shall
remain solely responsible to the Seller, the other Purchasers and the
Administrative Agent for the performance of such obligations, (iii) the Funding
Agent of such Purchaser shall act for the benefit of the members of the related
Purchaser Group for all purposes as set forth in this Agreement, and (iv) the
Seller, Administrative Agent and the other Purchasers shall continue to deal
solely and directly with such Purchaser (or the related Funding Agent) in
connection with such Purchaser's rights and obligations under this Agreement.
(b) Notwithstanding anything contained herein, no participant
shall be entitled to any payments under Section 7.02 and 7.03 in excess of any
amounts which would be payable to the Purchaser from which such participant
acquired its interest herein.
SECTION 10.03. Replacement of a Purchaser Group. In the event a
Conduit Purchaser elects (i) to not fund its Pro Rata Share of a Purchase Price,
(ii) to not fund its portion of the Net Investment by issuing Commercial Paper
or (iii) to assign its interest in the Net Investment to its related Committed
Purchaser, the Seller shall have the right to replace the related Purchaser
Group by requiring each member of such Purchaser Group to assign all of its
respective rights and obligations hereunder to the respective corresponding
members of a replacement Purchaser Group (which shall include a Conduit
Purchaser, Committed Purchaser and Funding Agent) pursuant to an assignment made
in accordance with Section 10.01 hereof and the next sentence of this Section
10.03, by giving thirty (30) days' prior written notice to the Administrative
Agent and the related Funding Agent specifying the date on which such assignment
shall occur; provided, however, that the Conduit Purchaser of such replacement
Purchaser Group (i) shall be a special purpose entity which issues promissory
notes in the commercial paper market to fund investments in and/or loans secured
by receivables and other cash flow assets, (ii) shall appoint a Funding Agent
and (iii) is approved by the Administrative
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Agent and each of the Funding Agents (other than the Funding Agent for such
Conduit Purchaser) which such approval shall not be unreasonably withheld. In
the event of any replacement of a Purchaser Group pursuant to this Section
10.03, each of the members of such Purchaser Group agrees to assign, pursuant to
an Assignment and Assumption Agreement, all of its respective rights and
obligations hereunder to the respective corresponding members of the replacement
Purchaser Group upon payment by the replacement Purchaser Group to the Funding
Agent of such Purchaser Group in immediately available funds of such Purchaser
Group's Pro Rata Share of the Net Investment, all accrued and unpaid Yield due
to such Purchaser Group and all other amounts then due to such Purchaser Group
under the Principal Agreements.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Agreement; Survival. This Agreement
shall terminate on the date following the date set forth in clause (iii) of the
definition of Termination Date (as extended pursuant to Section 2.08) upon which
all amounts due to the Purchasers, Funding Agents, the Administrative Agent and
the other Indemnified Parties under this Agreement and the other Principal
Agreements have been paid in full unless terminated earlier in accordance with
the terms of this Agreement; provided, however, that (x) the rights and remedies
of the Administrative Agent, any Purchaser or any Funding Agent with respect to
any representation and warranty made or deemed to be made by the Seller or the
Servicer pursuant to this Agreement or other instrument delivered pursuant
hereto and (y) the indemnification and payment provisions of Article VII, shall
be continuing and shall survive any termination of this Agreement. The
provisions of this Section 11.01 shall survive any termination or cancellation
of this Agreement.
SECTION 11.02. Protection of Right, Title and Interest to
Purchased Assets.
(a) The Seller shall cause all financing statements and
continuation statements (upon the request of the Administrative Agent) and any
other necessary documents covering the Purchasers' right, title and interest to
the Mortgage Loans and the other Collateral and its security interest in such
Mortgage Loans and other Collateral to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed, all in such
manner and in such places as may be required by law fully to preserve and
protect the right, title and interest of the Purchasers hereunder to such
Mortgage Loans and other Collateral. The Seller shall deliver to the
Administrative Agent a financing statement recording chart containing the filing
information with respect to any documents recorded, registered or filed as
provided above, as soon as available following such recording, registration or
filing. The Seller and the Servicer shall cooperate fully in connection with the
obligations set forth above and will execute any and all documents reasonably
required to fulfill the intent of this Section 11.02(a).
(b) The Servicer will give the Administrative Agent prompt
written notice of any relocation of any office from which it services the
Mortgage Loans purchased hereunder or keeps records concerning such Mortgage
Loans or of its principal executive office and whether, as a result of such
relocation, the applicable provisions of the relevant UCC would require the
filing of any amendment of any previously filed financing or continuation
statement or of any new
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financing statement and shall file such financing statements or amendments as
may be necessary to continue the perfection of the Purchasers' security interest
in the Mortgage Loans and other Collateral and the proceeds thereof. The
Servicer will at all times maintain each office from which it services such
Mortgage Loans and its principal executive office within the United States of
America.
SECTION 11.03. Waivers; Cumulative Remedies; Amendments.
(a) No failure to exercise or delay in exercising, on the part of
the Administrative Agent, any Funding Agent or any Purchaser, any right, remedy
power or privilege under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, remedy, power or
privilege hereunder preclude any other further exercise thereof or the exercise
of any other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided shall be cumulative and nonexclusive of any rights,
remedies, powers or privileges provided by law.
(b) Except as provided below, no amendment or modification of any
provision of this Agreement shall be effective without the written agreement of
the Seller, the Servicer and the Required Funding Agents and no termination or
waiver of any provision of this Agreement or consent to any departure therefrom
by the Seller or the Servicer shall be effective without the written concurrence
of the Required Funding Agents. Any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
Notwithstanding the foregoing, the written consent of each of the Funding Agents
shall be required for any amendment, modification, waiver or release (i)
reducing the Net Investment, or any Yield thereon, for any Interest Period, or
the amount of any fees payable hereunder or under the terms of the Fee Letter,
(ii) postponing any date for any payment of Net Investment, Yield or fees
payable hereunder or under the terms of the Fee Letter, (iii) modifying the
provisions of this Section 11.03(b), (iv) amending or waiving the Termination
Events set forth in Sections 8.01(a), (b) and (e), (v) except as expressly
contemplated in this Agreement, releasing the Purchasers' interest in the
Mortgage Loans, (vi) changing any of the following definitions: "Required
Funding Agents," "Purchase Price," "Concentration Limits," "Approved Takeout
Investor," "Eligible Institution," "Eligible Mortgage Loan," "Fall-Out Rate," or
"Completion Fee," and (vii) increasing the Commitment of any Purchaser in its
Purchaser Group. A condition precedent to any material amendment or any
amendment which requires the consent of each of the Funding Agents as described
above shall be the receipt by the applicable Funding Agent of written
confirmation from each of Standard & Poor's, ▇▇▇▇▇'▇ and Fitch that the rating
of the Commercial Paper of each Conduit Purchaser which is rated by such rating
agency shall not be withdrawn or downgraded as a result of such amendment.
SECTION 11.04. Governing Law; Submission to Jurisdiction;
Integration.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE
CITY OF NEW YORK FOR
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PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING IN THIS SECTION 11.04
SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT, ANY PURCHASER OR ANY FUNDING
AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST THE SELLER, THE SERVICER OR
THEIR RESPECTIVE PROPERTY IN THE COURTS OF OTHER JURISDICTIONS.
(b) EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE AMONG ANY OF THEM ARISING OUT OF, CONNECTED WITH, RELATING TO OR
INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR
THE OTHER PRINCIPAL AGREEMENTS.
(c) This Agreement contains the final and complete integration of
all prior expressions by the parties hereto with respect to the subject matter
hereof and shall constitute the entire Agreement among the parties hereto with
respect to the subject matter hereof superseding all prior oral or written
understandings.
(d) The Seller and the Servicer each hereby appoint Mr. ▇▇▇▇
▇▇▇▇, General Counsel of the Seller and the Servicer, at the address of the
Seller and the Servicer set forth on Schedule B as the authorized agent upon
whom process may be served in any action arising out of or based upon this
Agreement, the other Principal Agreements to which such Person is a party or the
transactions contemplated hereby or thereby that may be instituted in the United
States District Court for the Southern District of New York and of any New York
state court sitting in The City of New York by the Administrative Agent, any
Purchasers, any Funding Agent or any assignee of any of them.
SECTION 11.05. Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement.
SECTION 11.06. Headings. The headings in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the meaning
or interpretation of any provisions hereof.
SECTION 11.07. Notices. Every demand, notice, and communication
under this Agreement shall be in writing (which shall include electronic
delivery where contemplated by this Agreement), and shall be deemed to have been
duly given, made and received (i) one (1) Business Day after it is delivered
against receipt of registered or certified mail or upon actual
84
receipt of registered or certified mail, postage prepaid, return receipt
requested; (ii) when delivered by courier with appropriate evidence of receipt;
or (iii) one (1) Business Day after it is transmitted via facsimile transmission
with appropriate evidence of receipt at the addresses of the recipient set forth
in Schedule B hereto. Any party may alter the address to which communications
are to be sent by giving notice of such change of address in conformity with the
provisions of this Section 11.07 for giving notice and by otherwise complying
with any applicable terms of this Agreement.
SECTION 11.08. Successors and Assigns.
(a) This Agreement shall be binding on, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns;
provided, however, that neither the Seller nor the Servicer may assign any of
its rights or delegate any of its duties hereunder or under any of the other
Principal Agreements to which it is a party without the prior written consent of
the Administrative Agent and Funding Agents. The Administrative Agent and the
Funding Agents hereby consent to the Servicer's delegation of the duties set
forth on Schedule E. Notwithstanding any delegation by the Servicer, (i) the
Servicer shall be and remain primarily liable to the Administrative Agent, the
Funding Agents and the Purchasers for the full and prompt performance of all
duties and responsibilities of the Servicer hereunder and (ii) the
Administrative Agent, the Funding Agents and the Purchasers shall be entitled to
deal exclusively with the Servicer in matters relating to the discharge by the
Servicer of its duties and responsibilities hereunder.
(b) Each of the Seller and the Servicer hereby agrees and
consents to the assignment by each Conduit Purchaser from time to time of all or
any part of its rights under, interest in and title to this Agreement and the
Net Investment to any Liquidity Provider or Program Support Provider for such
Conduit Purchaser. In addition, each of the Seller and the Servicer hereby
consents to the assignment by (i) each Conduit Purchaser of all of its rights
under, interest in and title to its Pro Rata Share of the Net Investment to the
related Committed Purchaser in the event such Conduit Purchaser determines not
to fund any Purchase Price hereunder and (ii) any Conduit Purchaser of all or a
portion of its rights under, interest in and title to its Pro Rata Share of the
Net Investment to an Eligible Assignee as set forth in Section 10.01(a) hereof.
SECTION 11.09. Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or rights of the
Administrative Agent, Funding Agents and/or Purchasers thereof.
SECTION 11.10. Further Assurances. The Seller and the Servicer
each agrees to do and perform from time to time, any and all acts and to execute
any and all further instruments required or reasonably requested by the
Administrative Agent or Funding Agents more fully to effect the purposes of this
Agreement in a manner consistent with this Agreement, including, without
limitation, the execution of any financing statements or continuation
85
statements or other documents or instruments relating to the assets purchased
hereunder for filing under the provisions of the UCC or other relevant laws of
any applicable jurisdiction.
SECTION 11.11. Confidentiality.
(a) The Seller and the Servicer each hereby agrees to maintain
the confidentiality of this Agreement, the Fee Letter, the Agent Fee Letter, and
all other related documents and drafts thereof in communications with third
parties (other than the Seller's and the Servicer's respective employees,
accountants, auditors, shareholders or counsel); provided, however, that this
Agreement may be disclosed to third parties to the extent such disclosure is (i)
required in order to comply with any applicable law, order, regulation or
ruling, (ii) required in response to any summons or subpoena or in connection
with any litigation, or (iii) related to the structure and tax aspects (as such
terms are used in Internal Revenue Code Sections 6011, 6111 and 6112 and the
regulations promulgated thereunder) of the transactions contemplated by this
Agreement and all other related documents, in the case of this clause (iii),
together with all materials of any kind (including opinions or other tax
analyses) that are related to such structure and tax aspects.
(b) The Administrative Agent and each Managing Agent and each
Purchaser agree to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (i) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors who have a reason to use such Information in connection with
the administration of the Principal Agreements (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information confidential
and agree to use the Information solely for purposes of such administration),
(ii) to the extent requested by any regulatory authority, (iii) pursuant to any
laws, rules, directions, requests, orders or regulations of any judicial,
administrative or regulatory authority or proceedings (whether or not having the
force or effect of law), or by any subpoena or similar legal process, (iv) to
any other party to this Agreement, (v) in connection with the exercise of any
remedies under the Principal Agreements or any suit, action or proceeding
relating to the Principal Agreements or the enforcement of rights under the
Principal Agreements, (vi) to any assignee of or participant in, or any
prospective assignee of or participant in, any of its rights or obligations
under the Principal Agreements, (vii) to any rating agency, commercial paper
dealer or provider of a surety, guaranty or credit or liquidity enhancement to
any Conduit Purchaser or any entity organized for the purpose of purchasing, or
making loans secured by, financial assets for which any Managing Agent acts as
the administrative agent and to any officers, directors, employees, outside
accountants and attorneys of any of the foregoing, (viii) with the consent of
both the Seller and the Servicer or (ix) to the extent such Information (1)
becomes publicly available other than as a result of a breach of this Section or
(2) becomes available to the Administrative Agent, any Managing Agent or any
Purchaser on a non-confidential basis from a source other than the Seller, the
Servicer or any of their Affiliates. For the purposes of this Section,
"Information" means this Agreement, the Fee Letter, the Agent Fee Letter and all
other related documents and drafts thereof, and all information received from
any Performance Guarantor, the Seller or the Servicer relating to any of such
Persons or their business, other than any such information that is available to
the Administrative Agent, any Managing Agent or any Purchaser
86
on a non-confidential basis prior to disclosure by such Performance Guarantor,
the Seller or the Servicer.
SECTION 11.12. Setoff. The Seller and the Servicer each hereby
irrevocably and unconditionally waives all right to setoff that it may have
under contract (including this Agreement), applicable law or otherwise with
respect to any funds or monies of the Purchasers at any time held by or in the
possession of the Seller or the Servicer.
SECTION 11.13. Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding of
the parties relating to the subject matter hereof, and all other prior
understandings, written or oral are superseded by this Agreement. This Agreement
may not be modified, amended, waived or supplemented except as provided herein.
SECTION 11.14. Certificates and Opinions of Counsel.
(a) Any certificate delivered hereunder may be based, insofar as
it relates to legal matters, upon an Opinion of Counsel, unless the Person
delivering such certificate knows, or in the exercise of reasonable care should
know, that such opinion with respect to the matters upon which such certificate
may be based as aforesaid is erroneous. Any Opinion of Counsel or certificate
delivered hereunder may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, or the Seller, as the case may be, stating that the information
with respect to such factual matters is in the possession of the Servicer or the
Seller, as the case may be, unless such counsel or the Person delivering such
certificate knows, or in the exercise of reasonable care should know, that such
certificate, opinion or representations with respect to such matters are
erroneous. Any Opinion of Counsel delivered hereunder may contain exceptions and
qualifications satisfactory to the Administrative Agent and the Funding Agents.
(b) Any Opinion of Counsel or certificate delivered hereunder may
be based, insofar as it relates to accounting matters, upon a certificate or
opinion of or representations by a nationally recognized public accounting firm,
unless such counsel or the Person delivering such certificate, as the case may
be, knows that the certificate or opinions or representations with respect to
the accounting matters upon which the certificate or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous.
(c) Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments hereunder, they may, but need not, be consolidated and form
one instrument.
SECTION 11.15. Non-Petition Covenant. Each party hereto hereby
covenants and agrees that so long as any Conduit Purchaser has any outstanding
indebtedness for borrowed money and for one year and one day thereafter, neither
it nor any Affiliate thereof will file any involuntary petition or otherwise
institute against, or join with or knowingly or intentionally encourage or
cooperate with, any other Person or entity in instituting against, such Conduit
Purchaser, any bankruptcy, reorganization, arrangement, insolvency or
liquidation
87
proceeding, or other proceeding under any federal or state bankruptcy or similar
law. The provisions of this Section 11.15 shall survive the termination of this
Agreement
SECTION 11.16. Limited Recourse.
(a) Each Conduit Purchaser shall be required to make payment of
the amounts required to be paid pursuant hereto only if such Conduit Purchaser
has Excess Funds (as defined below). If such Conduit Purchaser does not have
Excess Funds, the excess of the amount due hereunder over the amount paid shall
not constitute a "Claim" (as defined in Section 101(5) of the Federal Bankruptcy
Code) against such Conduit Purchaser until such time as such Conduit Purchaser
has Excess Funds. If such Conduit Purchaser does not have sufficient Excess
Funds to make any payment due hereunder, then such Conduit Purchaser may pay a
lesser amount and make additional payments that in the aggregate equal the
amount of deficiency as soon as possible thereafter. The term "Excess Funds"
shall mean the excess of (a) the aggregate projected value of such Conduit
Purchaser's assets and other property (including cash and cash equivalents),
over (b) the sum of (i) the sum of all scheduled payments of principal, interest
and other amounts payable on publicly or privately placed indebtedness of such
Conduit Purchaser for borrowed money, plus (ii) the sum of all other
liabilities, indebtedness and other obligations of such Conduit Purchaser for
borrowed money or owed to any credit or liquidity provider, together with all
unpaid interest then accrued thereon, plus (iii) all taxes payable by such
Conduit Purchaser to the Internal Revenue Service, plus (iv) all other
indebtedness, liabilities and obligations of such Conduit Purchaser then due and
payable, but the amount of any liability, indebtedness or obligation of such
Conduit Purchaser shall not exceed the projected value of the assets to which
recourse for such liability, indebtedness or obligation is limited. Excess Funds
shall be calculated once each Business Day.
(b) No claim may be made by the Seller, the Servicer or any other
Person against any Purchaser, any Funding Agent, the Administrative Agent or
their respective Affiliates, directors, officers, employees, attorneys or agents
for any special, indirect, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this Agreement, or any act, omission
or event occurring in connection therewith; and each of the Seller and the
Servicer hereby waives, releases, and agrees not to ▇▇▇ upon any claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor.
(c) The provisions of this Section 11.16 shall survive the
termination of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
AMERICAN HOME MORTGAGE CORP.,
as Seller
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President,
General Counsel & Secretary
AMERICAN HOME MORTGAGE SERVICING,
INC.,
as Servicer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President,
General Counsel & Secretary
Signature Page to
Mortgage Loan Purchase and Sale Agreement
SOCIETE GENERALE, as Administrative Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
▇▇▇▇▇▇ CAPITAL LLC, as a Conduit
Purchaser and as a Committed Purchaser
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
SOCIETE GENERALE,
as a Funding Agent
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Managing Director
Signature Page to
Mortgage Loan Purchase and Sale Agreement
SCHEDULE A
Purchaser Groups
Conduit Related Related Purchaser
Purchaser Funding Agent Committed Purchaser Group Limit
--------- ------------- ------------------- -----------
▇▇▇▇▇▇ Capital Societe Generale ▇▇▇▇▇▇ Capital $500,000,000
Corporation Corporation